Strategic Patient Discharge: The Case of Long-Term Care Hospitals
AbstractMedicare's prospective payment system for long-term acute-care hospitals (LTCHs) provides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a prespecified number of days. We show that LTCHs respond to the financial incentives of this system by disproportionately discharging patients after they cross the large-payment threshold. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities colocated with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare.
CitationEliason, Paul J., Paul L. E. Grieco, Ryan C. McDevitt, and James W. Roberts. 2018. "Strategic Patient Discharge: The Case of Long-Term Care Hospitals." American Economic Review, 108 (11): 3232-65. DOI: 10.1257/aer.20170092
- H51 National Government Expenditures and Health
- I11 Analysis of Health Care Markets
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health