Strategic Patient Discharge: the Case of Long-Term Care Hospitals.

Scholarly Edition

Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) provides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a prespecified number of days. We show that LTCHs respond to the financial incentives of this system by disproportionately discharging patients after they cross the large-payment threshold. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities colocated with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare.

Full Text

Duke Authors

Cited Authors

  • Eliason, PJ; Grieco, PLE; McDevitt, RC; Roberts, JW

Published Date

  • November 2018

Start / End Page

  • 3232 - 3265

PubMed ID

  • 30375804

Digital Object Identifier (DOI)

  • 10.1257/aer.20170092