Strategic Patient Discharge: The Case of Long-Term Care Hospitals
Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) pro- vides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a pre-specified number of days. We show that LTCHs respond to financial incentives by disproportionately discharging patients after they cross the large-payment threshold, resulting in worse outcomes for patients. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities co-located with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare without adversely affecting patients.
Document Object Identifier (DOI): 10.3386/w22598
Published: Paul J. Eliason & Paul L. E. Grieco & Ryan C. McDevitt & James W. Roberts, 2018. "Strategic Patient Discharge: The Case of Long-Term Care Hospitals," American Economic Review, vol 108(11), pages 3232-3265. citation courtesy of
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