Expansion of Medicare's post-acute care (PAC) transfer payment policy to additional DRG codes is still under consideration by the Centers for Medicare and Medicaid Services. Our study helps inform that debate by providing objective analyses that highlight the perspective of rural hospitals. Specifically, the following questions are addressed:

• How did the initial PAC payment change affect hospitals behavior? Did the impact differ by type of hospital? By pilot DRG?
  
• How did the payment change affect Medicare revenues for different types of hospitals?
  
• How would an expansion to additional DRGs affect different types of hospitals?
  
• How would an expansion to swing bed discharges affect rural hospitals?

FY98-FY01 MedPAR hospital discharge data were used, providing one year of baseline data and a three-year post-implementation period. In addition, cost report data was used to construct financial vulnerability measures that consider each hospital's income, financial reserves, and liquidity. The study also examines four-year trends in inpatient length-of-stay and patterns of discharge to the various PAC settings for each of the 10 DRGs, for short- vs. long-stay transfers, and for various categories of hospitals. Hospitals are grouped according to their rural/urban location, size, ownership of a PAC provider, and financial vulnerability. In addition, we simulate payments under the current system and payments if the transfer policy is extended.

Related Products

Schoenman, J. 2004. "Exploring the Impact of Medicare's Post-Acute Care Transfer Payment Policy on Rural Hospitals." NORC Walsh Center for Rural Health Analysis Policy Brief, W Series, No. 5.  (376K)

Schoenman, J. 2004. "Rural Implications of Medicare's Post-Acute Transfer Payment Policy." Final report.  Washington, DC: Office of Rural Health Policy.  (4.2MB)