Strategic Patient Discharge: The Case of Long-Term Care Hospitals
- (pp. 3232-65)
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.
Citation2018. "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