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Article
Does How Much and How You Pay Matter? Evidence from the Inpatient Rehabilitation Facility Prospective Payment System
Journal of Health Economics (2008)
  • Neeraj Sood
  • Melinda Buntin
  • José J. Escarce
Abstract

We use the implementation of a new prospective payment system (PPS) for inpatient rehabilitation facilities (IRFs) to investigate the effect of changes in marginal and average reimbursement on costs. The results show that the IRF PPS led to a significant decline in costs and length of stay. Changes in marginal reimbursement associated with the move from a cost based system to a PPS led to a 7 to 11% reduction in costs. The elasticity of costs with respect average reimbursement ranged from 0.26 to 0.34. Finally, the IRF PPS had little or no impact on costs in other sites of care, mortality, or the rate of return to community residence.

Keywords
  • Provider reimbursement; Prospective payment; Medicare
Disciplines
Publication Date
January, 2008
Citation Information
Neeraj Sood, Melinda Buntin and José J. Escarce. "Does How Much and How You Pay Matter? Evidence from the Inpatient Rehabilitation Facility Prospective Payment System" Journal of Health Economics (2008)
Available at: http://works.bepress.com/melinda_buntin1/15/