Prospective payment and psychiatric discharges from general hospitals with and without psychiatric units

For psychiatric patients treated in general hospitals, the prospective payment system does not differentiate between patients treated in medical-surgical wards and patients treated in psychiatric units. In particular, the system uses a single length-of-stay norm for both kinds of patients, even though psychiatric patients in medical-surgical units have shorter stays. The authors document major differences in length of stay and hospital charges for both groups of patients in relation to selected patient and hospital characteristics. They conclude that the current reimbursement procedures systematically overpay for stays in nonpsychiatric units and underpay for stays in psychiatric units, and they suggest mechanisms for partly reducing such inequities.