Related Experiment Videos

Medicare prospective payment and the use of medical technologies in hospitals

F A Sloan1, M A Morrisey, J Valvona

  • 1Department of Economics, Vanderbilt University, Nashville, TN 37235.

Medical Care
|September 1, 1988
PubMed

Insights

The Medicare Prospective Payment System (PPS) influenced hospital technology use. Post-PPS, intensive care unit admissions rose, but use of many nonsurgical procedures decreased for Medicare and non-Medicare patients.

Area of Science:

  • Health Economics
  • Hospital Administration
  • Medical Technology Assessment

Background:

  • The Medicare Prospective Payment System (PPS) was implemented to control healthcare costs.
  • PPS created financial incentives that could alter the utilization of medical technologies and procedures in hospitals.

Purpose of the Study:

  • To assess the impact of Medicare's Prospective Payment System (PPS) on the use of intensive care units (ICUs) and nonsurgical procedures.
  • To compare technology and procedure utilization before and after PPS implementation.

Main Methods:

  • Analysis of data from 501 hospitals.
  • Comparison of patient data from 1980 (pre-PPS) and 1983-85 (post-PPS).
  • Examination of trends in intensive care unit admissions and nonsurgical procedure use.

Main Results:

  • Intensive care unit admissions increased for both Medicare and non-Medicare patients post-PPS, with constant length of stay.
  • Utilization of several nonsurgical procedures, such as CAT scans and intravenous pyelograms, decreased or slowed post-PPS.
  • Routine diagnostic tests and therapy services showed decreased utilization after 1983.

Conclusions:

  • Medicare's PPS significantly influenced the in-hospital use of numerous nonsurgical procedures.
  • The system impacted technology adoption and utilization patterns for both Medicare and non-Medicare beneficiaries.
  • PPS financial incentives appear to have led to reduced application of certain medical technologies and procedures.

Related Concept Videos