Effects of Medicare Payment Reform: Evidence from the Home Health Interim and Prospective Payment Systems

57 Pages Posted: 13 Mar 2012

See all articles by Peter J. Huckfeldt

Peter J. Huckfeldt

RAND Corporation

Neeraj Sood

University of Southern California; National Bureau of Economic Research (NBER); RAND Corporation; University of Southern California - Schaeffer Center for Health Policy and Economics

Jose Escarce

University of California, Los Angeles (UCLA) - RAND Health Sciences Program; National Bureau of Economic Research (NBER)

David C. Grabowski

Harvard University - Department of Health Care Policy

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2012

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, health care reform

JEL Classification: H42, I1

Suggested Citation

Huckfeldt, Peter J. and Sood, Neeraj and Escarce, José and Grabowski, David C. and Newhouse, Joseph P., Effects of Medicare Payment Reform: Evidence from the Home Health Interim and Prospective Payment Systems (March 1, 2012). HKS Working Paper No. RWP12-007, Available at SSRN: https://ssrn.com/abstract=2020441 or http://dx.doi.org/10.2139/ssrn.2020441

Peter J. Huckfeldt (Contact Author)

RAND Corporation ( email )

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Neeraj Sood

University of Southern California ( email )

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National Bureau of Economic Research (NBER)

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RAND Corporation ( email )

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Santa Monica, CA 90407-2138
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University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

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Los Angeles, CA 90089-3333
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José Escarce

University of California, Los Angeles (UCLA) - RAND Health Sciences Program ( email )

Los Angeles, CA 90095
United States
310-794-3842 (Phone)
310-794-0726 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David C. Grabowski

Harvard University - Department of Health Care Policy ( email )

25 Shattuck Street
Boston, MA 02115
United States

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS) ( email )

Department of Health Care Policy
Boston, MA 02115
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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