TY - JOUR AU - Sood,Neeraj AU - Huckfeldt,Peter J. AU - Grabowski,David C. AU - Newhouse,Joseph P. AU - Escarce,José J. TI - The Effect of Prospective Payment on Admission and Treatment Policy: Evidence from Inpatient Rehabilitation Facilities JF - National Bureau of Economic Research Working Paper Series VL - No. 17125 PY - 2011 Y2 - June 2011 UR - http://www.nber.org/papers/w17125 L1 - http://www.nber.org/papers/w17125.pdf N1 - Author contact info: Neeraj Sood Schaeffer Center for Health Policy and Economics 3335 S. Figueroa Street, Unit A Los Angeles, CA 90089-7273 Tel: 310/393-0411 Fax: 310/260-8156 E-Mail: nsood@healthpolicy.usc.edu Peter J. Huckfeldt RAND Corporation Santa Monica, California E-Mail: Peter_Huckfeldt@rand.org David Grabowski Harvard University Department of Health Care Policy Harvard Medical School 180 Longwood Avenue Boston, MA 02115 E-Mail: grabowski@med.harvard.edu Joseph P. Newhouse Division of Health Policy Research and Education Harvard University 180 Longwood Avenue Boston, MA 02115-5899 Tel: 617/432-1325 Fax: 617/432-3503 E-Mail: newhouse@hcp.med.harvard.edu Jose Escarce UCLA Med-GIM-HSR 911 Broxton Avenue Box 951736 Los Angeles, CA 90024 Tel: 310/794-3842 Fax: 310/794-0732 E-Mail: jescarce@mednet.ucla.edu AB - We examine provider responses to the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS), which simultaneously reduced marginal reimbursement and increased average reimbursement. IRFs could respond to the PPS by changing the total number of patients admitted, admitting different types of patients, or changing the intensity of care for admitted patients. We use Medicare claims data to separately estimate each type of provider response to the PPS. We also examine changes in patient outcomes and spillover effects on other post acute care providers. We find that costs of care initially fell following the PPS implementation, which we attribute to changes in treatment decisions rather than the types of patients admitted to IRFs. However, the probability of admission to IRFs increased after the PPS due to the expanded admission policies of providers. We find modest spillover effects on skilled nursing home costs and no substantive impact on patient health outcomes. ER -