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

Peter J. Huckfeldt, Neeraj Sood, José J. Escarce, David C. Grabowski, Joseph P. Newhouse

NBER Working Paper No. 17870
Issued in February 2012
NBER Program(s):Health Care, Health Economics

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.

download in pdf format
   (2215 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17870

Published: Huckfeldt, Peter J. & Sood, Neeraj & Escarce, José J. & Grabowski, David C. & Newhouse, Joseph P., 2014. "Effects of Medicare payment reform: Evidence from the home health interim and prospective payment systems," Journal of Health Economics, Elsevier, vol. 34(C), pages 1-18. citation courtesy of

Users who downloaded this paper also downloaded* these:
Sood, Huckfeldt, Grabowski, Newhouse, and Escarce w17125 The Effect of Prospective Payment on Admission and Treatment Policy: Evidence from Inpatient Rehabilitation Facilities
Dyrda, Kaplan, and Ríos-Rull w17880 Business Cycles and Household Formation: The Micro vs the Macro Labor Elasticity
Acemoglu w17994 The World our Grandchildren Will Inherit: The Rights Revolution and Beyond
Richardson and Bogart w13757 Institutional Adaptability and Economic Development: The Property Rights Revolution in Britain, 1700 to 1830
McKnight w10414 Home Care Reimbursement, Long-term Care Utilization, and Health Outcomes
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us