The impact of transfer patients on Medicare inpatient cost per discharge

The cost of inpatient transfer cases has concerned hospitals as well as rate-setters. Reform of transfer payment in Medicare's Prospective Payment System has been suggested to ensure access and adequate treatment for these cases in a period where inpatient revenue has been declining. This analysis indicates that both transfer cases received and cases transferred to other hospitals have above average costs per case but their impact on Medicare inpatient cost per discharge is smaller than that of variables such as case-mix, area wages and resident/bed ratio which are used directly in PPS payment. Evidence is provided indicating the desirability of reform of PPS payment methods for transfer cases.