Effects of payment changes on urgent/emergent admissions in rural and urban communities

Reimbursement changes during the 1980s, particularly Medicare diagnosis-related group (DRG) reform and the growth of managed care, have squeezed hospital revenues available for cross-subsidizing care for uninsured patients and patients for whom marginal costs exceed marginal revenues. This study uses logistic regression with time and residence interactions to explore the impact of payment changes on rural versus urban patients' admission status (urgent versus nonurgent). Findings show that uninsured rural patients had a significantly higher probability in 1987 than they did in 1983 of being admitted to hospitals in an urgent/emergent condition. Findings also show incrementally higher probabilities for Medicare and Medicaid rural patients in 1987. Results are consistent with the view that cross-subsidization is no longer effective for covering uninsured rural care and that more direct subsidies may be necessary.