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Medicare prospective payment reforms and hospital utilization. Temporary or lasting effects?
1Department of Health Services Administration, University of Arkansas, Little Rock 72204.
Medical Care
|April 1, 1993
Summary
Medicare prospective payment reforms initially reduced hospital utilization. While reforms remained effective over a decade, their impact lessened, with some utilization increases observed in later years.
Area of Science:
- Health economics
- Healthcare policy
- Hospital management
Background:
- Early Medicare prospective payment reforms significantly decreased hospital utilization.
- The long-term effectiveness of these reforms beyond initial evaluations was unclear.
Purpose of the Study:
- To assess the sustained impact of Medicare prospective payment reforms on hospital utilization throughout their first decade.
- To identify trends and potential contributing factors to changes in hospital use post-reform.
Main Methods:
- Utilized seasonal autoregressive-integrated-moving average (ARIMA) models with intervention components.
- Analyzed age-specific national time series data for hospital admissions, average length of stay, and inpatient days (1970-1992).
- Examined three regulatory impact patterns using quarterly National Hospital Panel Survey data.
Main Results:
- Reforms initially reduced hospital admissions, length of stay, and patient days in fiscal years 1983-1984.
- Significant readjustments in all utilization measures occurred in fiscal years 1985-1986.
- Observed less pronounced readjustments in non-Medicare data, suggesting regulatory spill-over effects.
Conclusions:
- Medicare reimbursement reforms continued to reduce hospital utilization, albeit at a diminished rate.
- Increased patient acuity and hospital diversification may explain utilization increases during 1985-1986.
- The long-term effectiveness of Medicare payment reforms requires ongoing monitoring.