Effect of the prospective-pricing system on drug use in Pennsylvania long-term-care facilities

Health status, nondrug treatment, and drug use were compared for patients discharged from hospitals to seven long-term-care facilities (LTCFs) in Pennsylvania before and after implementation of the prospective-pricing system (PPS) for hospitalized Medicare patients. Data were collected from medical records of LTCF patients for August 1982 through July 1983 (pre-PPS) and August 1985 through July 1986 (post-PPS). Patients in the post-PPS group (n = 297) had greater numbers of illnesses and more serious illnesses on admission to the LTCFs and were more likely to be readmitted to hospitals than pre-PPS patients (n = 312). Patients in the post-PPS group required more nondrug treatments such as urinary catheters, nutritional supplements, and oxygen and received significantly more drug therapy. The cost of drugs was 50% higher in the PPS group. The post-PPS patients admitted to the LTCFs apparently required more posthospital drug and non-drug therapy than the pre-PPS patients. Any system for prospective pricing in LTCFs should take into account the increases in costs for providing long-term care, including drug therapy, that have occurred since prospective pricing for hospitalized patients began.