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Faculty Research Working Paper Series
Joseph P. Newhouse
John D. MacArthur Professor of Health Policy and Management, HKS and HSPH; Professor of Health Care Policy, HMS
phone: (617)496-9307
fax: (617)496-2860
Effects of Medicare Payment Reform: Evidence from the Home Health Interim and Prospective Payment Systems
Huckfeldt, Peter J., Neeraj Sood, José J Escarce, David C. Grabowski, and Joseph P. Newhouse. "Effects of Medicare Payment Reform: Evidence from the Home Health Interim and Prospective Payment Systems." HKS Faculty Research Working Paper Series RWP12-007, March 2012.
Abstract
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.
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