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

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  • Huckfeldt, Peter J.

    (RAND Corporate, Santa Monica, CA)

  • Sood, Neeraj

    (University of Southern CA)

  • Escarce, Jose J.

    (UCLA)

  • Grabowski, David C.

    (Harvard University)

  • Newhouse, Joseph P.

    (Harvard University)

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.

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Bibliographic Info

Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp12-007.

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Date of creation: Mar 2012
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Handle: RePEc:ecl:harjfk:rwp12-007

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  1. Doug Miller & A. Colin Cameron & Jonah B. Gelbach, 2006. "Bootstrap-Based Improvements for Inference with Clustered Errors," Working Papers 621, University of California, Davis, Department of Economics.
  2. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-96, December.
  3. Neeraj Sood & Peter J. Huckfeldt & David C. Grabowski & Joseph P. Newhouse & José J. Escarce, 2011. "The Effect of Prospective Payment on Admission and Treatment Policy: Evidence from Inpatient Rehabilitation Facilities," NBER Working Papers 17125, National Bureau of Economic Research, Inc.
  4. Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 391-430, May.
  5. Grabowski, David C. & Afendulis, Christopher C. & McGuire, Thomas G., 2011. "Medicare prospective payment and the volume and intensity of skilled nursing facility services," Journal of Health Economics, Elsevier, vol. 30(4), pages 675-684, July.
  6. Robin McKnight, 2004. "Home Care Reimbursement, Long-term Care Utilization,And Health Outcomes," University of Oregon Economics Department Working Papers 2004-6, University of Oregon Economics Department.
  7. Hodgkin, Dominic & McGuire, Thomas G., 1994. "Payment levels and hospital response to prospective payment," Journal of Health Economics, Elsevier, vol. 13(1), pages 1-29, March.
  8. Joseph P. Newhouse, 2004. "Pricing the Priceless: A Health Care Conundrum," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640589, December.
  9. Ellis, Randall P. & McGuire, Thomas G., 1996. "Hospital response to prospective payment: Moral hazard, selection, and practice-style effects," Journal of Health Economics, Elsevier, vol. 15(3), pages 257-277, June.
  10. Sood, Neeraj & Buntin, Melinda Beeuwkes & Escarce, José J., 2008. "Does how much and how you pay matter? Evidence from the inpatient rehabilitation care prospective payment system," Journal of Health Economics, Elsevier, vol. 27(4), pages 1046-1059, July.
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