Working Paper: NBER ID: w17870
Authors: Peter J. Huckfeldt; Neeraj Sood; Jos J. Escarce; David C. Grabowski; Joseph P. Newhouse
Abstract: Medicare continues to implement payment reforms that shift reimbursement from fee-for-service towards episode-based payment, affecting average and marginal reimbursement. We contrast the effects of two reforms for home health agencies. The Home Health Interim Payment System in 1997 lowered both types of reimbursement; our conceptual model predicts a decline in the likelihood of use and costs, both of which we find. The Home Health Prospective Payment System in 2000 raised average but lowered marginal reimbursement with theoretically ambiguous effects; we find a modest increase in use and costs. We find little substantive effect of either policy on readmissions or mortality.
Keywords: Medicare; Payment Reform; Home Health; Prospective Payment System; Interim Payment System
JEL Codes: H42; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| home health interim payment system (IPS) (I13) | decreased admissions (I19) |
| home health interim payment system (IPS) (I13) | decreased resource use (Q21) |
| decreased admissions (I19) | decreased resource use (Q21) |
| prospective payment system (PPS) (H55) | modest increase in admissions (I23) |
| prospective payment system (PPS) (H55) | marginal increases in resource use (Q21) |
| average payments increase under PPS (I18) | marginal reimbursement reduction offsets increased average reimbursement (I18) |
| both payment reforms (E69) | limited effects on patient health outcomes (I14) |