Medicare psychiatric admissions, 1987-2004: does the past offer insights for the future?

In 2005, Medicare implemented a new prospective payment system (PPS) for inpatient psychiatric facilities (IPFs). Analysis of Medicare psychiatric inpatient claims for 1987-2004 provides insights into future experience after implementation. Growth in the under-age-sixty-five disabled population was the dominant factor driving growth in psychiatric admissions. However, from 1987 until the late 1990s, there was a noteworthy increase in the use rate among the older elderly. In the future, growth of the beneficiary population will be especially important for the elderly. How the use rate responds is likely to depend on supply responses to financial incentives inherent in Medicare payment policy.