Transfers of hospitalized psychiatric patients under Medicare's prospective payment system

Medicare's reimbursement policy provides payment incentives for hospitals to transfer psychiatric patients to another acute-care facility, especially when the destination facility is exempt from Medicare's prospective payment system. The authors found, however, that transfers were relatively infrequent in 1985, accounting for only approximately 3.4% of all psychiatric hospitalizations under Medicare. The most common type of transfer was from a nonspecialized general hospital bed to a Medicare-exempt psychiatric unit within the same hospital. Given that increasing financial pressures may result in a rise in the number of transfers, the authors discuss potential reforms of Medicare reimbursement for these cases.