USE OF MEDICARE SERVICES BEFORE AND AFTER INTRODUCTION OF THE PROSPECTIVE PAYMENT SYSTEM

Objective. The case mix-adjusted pattern of use of health care service s, especially posthospital care, is compared before and after the intr oduction of Medicare's Prospective Payment System (PPS). Data Sources. The 1982 and 1984 National Long Term Care Surveys (NLTCS) linked to M edicare administrative records 1982-1986 provide health and health ser vice use data for 12-month periods before and after the introduction o f PPS. Study Design. Case-mix differences between pre- and post-period s are controlled by using the Grade of Membership model to identify he alth groups from the NLTCS data. Differences in timing (e.g.. hospital length of stay) were controlled using life table models estimated for each health group, that is, service use patterns pre- and post-PPS ar e compared within groups. Principal Findings. Hospital LOS and admissi on rates declined post-PPS. Changes in the timing and location of deat h occurred but, overall, mortality did not increase. Changes in post-a cute care service use by elderly, chronically disabled Medicare benefi ciaries were observed: home health service use increased overall and a mong the unmarried disabled population. Conclusions. PPS did not adver sely affect quality of care as reflected in mortality or in hospital r eadmissions. Moreover, the differential use of post-acute care, and ch anges in hospital LOS by health group, indicate that the system respon ded, specific to marital status and age, to the severity of needs of c hronically disabled persons.