The impact of DRGs on community-based service providers: implications for the elderly

We investigated changes in community-based agencies following the implementation of the Medicare prospective payment system for hospitals utilizing DRGs (diagnosis-related groups). Data were collected in 1986 and 1987 from 771 community service providers. There were five major findings: 1) hospital discharge planners, nursing homes, and home health agencies experienced DRG effects before other types of community providers studies; 2) the "reach" of DRG impact is widespread; 3) providers report a change in clientele toward a heavier-care client; 4) the impact of DRGs affects the types of services agencies provide; and 5) community providers have experienced a decrease in their ability to refer their clients both to hospitals and to each other.