The Impact of Medicare's Prospective Payment System on Psychiatric Patients Treated in Scatterbeds

34 Pages Posted: 16 Jul 2004 Last revised: 21 Jul 2022

See all articles by Richard G. Frank

Richard G. Frank

Harvard Medical School; National Bureau of Economic Research (NBER)

Judith R. Lave

Graduate School of Public Health

Carl A. Taube

Independent

Agnes Rupp

Government of the United States of America - Division of Services and Intervention Research; National Bureau of Economic Research (NBER)

Howard H. Goldman

University of Maryland School of Medicine

Date Written: September 1986

Abstract

Medicare's Prospective Payment System (PPS) for hospitals was phased-in during the 1884 Federal Fiscal Year. While many providers of psychiatric inpatient care were exempted from PPS patients treated in general hospital beds outside of psychiatric units (scatterbeds) were not. This allows for an initial assessment of the impact of PPS on psychiatric patients. We use a single equation model of hospital length of stay to estimate the impact of PPS. We allow for the possibility of both anticipating behavior and slow adjustment to the new payment scheme. The results indicate a substantial response to PPS over the first year of implementation. The estimated response includes sizable anticipatory and slow adjustment components. The findings suggest that policy discussions may be weighted too heavily in the direction of concern over hospital financial status given the ability of hospitals to change their behavior.

Suggested Citation

Frank, Richard G. and Lave, Judith R. and Taube, Carl A. and Rupp, Agnes and Goldman, Howard H., The Impact of Medicare's Prospective Payment System on Psychiatric Patients Treated in Scatterbeds (September 1986). NBER Working Paper No. w2030, Available at SSRN: https://ssrn.com/abstract=344822

Richard G. Frank (Contact Author)

Harvard Medical School ( email )

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Judith R. Lave

Graduate School of Public Health ( email )

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Carl A. Taube

Independent

Agnes Rupp

Government of the United States of America - Division of Services and Intervention Research ( email )

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Howard H. Goldman

University of Maryland School of Medicine ( email )

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