Medicare elective surgery outcomes and state prospective reimbursement programs

This article examines the relationship between the introduction of State prospective reimbursement (PR) programs and mortality rates for elective surgery. We study 15 such programs using a sample of about 40 percent of U.S. hospitals. We examine mortality data for 1974 to 1983 for these hospitals, selecting a 20-percent sample of all Medicare admissions for eight elective procedures. Indirect standardization (age, sex, procedure) was used to define mortality outcomes, and regression procedures were used to estimate PR effects that controlled for hospital, community, and other regulatory influences. Introduction of PR is found to be occasionally and inconsistently associated with increases in relative mortality.