Early Effects of the Prospective Payment System on Inpatient Rehabilitation Hospital Performance
Accepted 21 October 2005.
Abstract
McCue MJ, Thompson JM. Early effects of the prospective payment system on inpatient rehabilitation hospital performance.
Objective
To assess changes in utilization and financial performance for inpatient rehabilitation facilities (IRFs) that shifted from Medicare’s cost-based payment system to the IRF prospective payment system (PPS).
Design
A pre-post nonequivalent comparison group design. The intervention group included IRFs that changed to the PPS in fiscal year 2002. The comparison group included IRFs that were paid under the cost-based system.
Setting
IRFs in the United States.
Participants
Final sample included 120 IRFs, with 26 IRFs in the comparison sample.
Interventions
Not applicable.
Main Outcome Measures
Outcome measures included utilization (length of stay [LOS], total discharges, Medicare discharges) and financial performance (revenue, expenses, profitability, Medicare payment and cost).
Results
PPS IRFs experienced a smaller decline in LOS, whereas Medicare cost per discharge increased at a lower rate. PPS IRFs reduced operating costs per discharge, whereas profit margin had a greater increase.
Conclusions
IRFs under PPS implemented cost controls that lead to lower operating costs below the fixed payment to profit under PPS. Discharge growth for PPS IRFs was similar to the comparison group. PPS facilities did not implement a strategy that attempted to admit more patients to increase Medicare payments.
aDepartment of Health Administration, Virginia Commonwealth University, Medical College of Virginia Campus, Richmond, VA
bHealth Services Administration Program, James Madison University, Harrisonburg, VA.
Correspondence to Michael J. McCue, DBA, Dept of Health Administration, Virginia Commonwealth University, Medical College of Virginia Campus, PO Box 980203, Richmond, VA 23298-0203
No commercial party having a direct financial interest in the results of the research supporting this article has or will confer a benefit upon the author(s) or upon any organization with which the author(s) is/are associated.
ABSTRACT