EFFECTS OF MEDICARE PROSPECTIVE PAYMENT SYSTEM ON SERVICE USE BY DEPRESSED ELDERLY INPATIENTS

Objective: To determine the effects of Medicare's prospective payment system (PPS) on hospital care, changes in length of stay and intensity of clinical services received by 2,746 depressed elderly patients in 297 acute care general medical hospitals were studied. Methods: A pre- post design was used, and differences in sickness at admission were co ntrolled for. Data on length of stay and use of specific clinical serv ices were obtained from the medical record using a medical record abst raction form. Care provided on units exempt from PPS was compared with care provided in nonexempt units. Results: After implementation of PP S, the average length of stay fell by up to three days within the diff erent types of acute care settings studied, but this decline was parti ally offset by proportionately more admissions to psychiatric units, w hich had longer lengths of stay. Intensity of clinical services increa sed after PPS implementation, especially in nonexempt psychiatric unit s. Conclusion: Despite financial incentives for hospitals to reduce cl inical services under PPS, its implementation was not associated with a marked decline in length of stay, when averaged across all treatment settings, and was associated with an increase in the intensity of man y clinical services used by depressed elderly patients in general hosp ital.