Paying the Piper, Calling the Tune: Implications of Changes in Reimbursement

43 Pages Posted: 22 Jun 2004 Last revised: 11 Oct 2008

See all articles by Victor R. Fuchs

Victor R. Fuchs

National Bureau of Economic Research (NBER)

Date Written: April 1985

Abstract

The United States is in the midst of a revolution in health care finance, the third since the end of World War II. Medicare's prospective payment system (PPS) based on diagnosis-related groups (DRGs), the State of California's hospital-specific contracts for Medi-Cal patients, deductibles and coinsurance, health maintenance organizations (HMOs), and preferred provider organizations (PPOs) are among the best known symbols of the new era in health care finance. This paper analyzes the economic factors responsible for innovations in reimbursement, discusses the distinguishing characteristics of the new methods, and examines their potential impact on hospitals, physicians, nurses, and patients. The paper concludes by considering some fundamental problems of public policy with respect to health care.

Suggested Citation

Fuchs, Victor R., Paying the Piper, Calling the Tune: Implications of Changes in Reimbursement (April 1985). NBER Working Paper No. w1605. Available at SSRN: https://ssrn.com/abstract=336337

Victor R. Fuchs (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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