Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #115738

Emily Shelton, Health Management and Policy, University of Michigan, 109 Observatory Street, M3141, Ann Arbor, MI 48109, 734-763-4394, ecshelto@umich.edu

In 2003, Medicare introduced the Prospective Payment System for Long-term Care Hospitals (LTCH). Now LTCHs receive a lump-sum payment for each patient according to their diagnosis, rather than being reimbursed on cost. There have been numerous studies on prospective payment to acute care hospitals. These studies found that the Inpatient Prospective Payment System (the IPPS) resulted in an across-the-board shortening of stay. However, the effect may not be the same for LTCHs because they face an additional, competing incentive to remain excluded from the IPPS by maintaining a length of stay greater than 25 days. Moreover, LTCHs may respond to payment system incentives differently than acute care hospitals because they may exercise some selection over admission.

This study uses 250,000 patient stay records from the MEDPAR dataset, and facility information from the OSCAR/POS file to show the effect of PPS on length of stay. I show that PPS has a positive effect on the probability of discharge on all days using Cox proportional hazard models. In other words, LTCHs are in fact responding to the incentive structure implicit in prospective payment by shortening length of stay.

The breadth of these data also allow for close scrutiny of how PPS may affect LTCH patients differentially. Preliminary results suggest that one possible gaming of the system is not being acted upon: although LTCHs have a new incentive to limit intercurrent short stays at other facilities, this seems not to be the case. However, preliminary results also suggest that patients diagnosed with long-stay conditions have particularly shortened stays.

This study accomplishes three things. First, this study adds new insight into hospital behavior under conflicting payment system incentives. Second, this study adds to the growing literature on LTCHs and their role in the health care system. Finally, this study suggests that preserving access under the LTCH PPS is more complicated than under the IPPS.

Learning Objectives:

2. Recognize the importance of conflicting incentives in payment systems.
4. Broaden understanding of within-system access issues with respect to LTCH patient access to acute, post-acute care services.
6. Articulate the role of LTCHs among post-acute providers.

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commercial supporters.

Recorded presentation