Research Center
Christopher M. Murtaugh, Ph.D., Principal Investigator
Timothy Peng, Ph.D. Senior Research Scientist
Lori King, B.A., Research Analyst
Center for Medicare & Medicaid Services (CMS)
Ann Meadow, CMS Advisor
Independent Contractor
Stanley Moore, Senior Programmer
Laguna Research Associates
Nelda McCall, Senior Advisor

Background: Congress profoundly changed Medicare payment policy for most participating providers over the past two decades by replacing fee-for-service reimbursement with prospective payment systems. Under fixed payment systems there are incentives for providers to operate more efficiently as well as to stint on services, shift some services to other settings, upcode diagnoses or procedures, and engage in risk selection. The introduction of these payment systems, therefore, has the potential not only to change provider behavior but to substantially affect individuals' access to services and quality of care.”

Purpose: This project will use a pre-post quasi-experimental design to examine the effect on agency practices and beneficiary outcomes of the introduction of the Medicare home health PPS in October of 2000. Center for Medicare and Medicaid Services (CMS) data files created to evaluate home health PPS will be analyzed by the project team. Our goal is to answer key questions in the following areas:

1. How have PPS incentives affected access to and the cost of Medicare home health services?
2. Are patient outcomes worse after the implementation of PPS?
3. What effect has home health PPS had on post-acute care outcomes?

We will examine the effects of PPS on Medicare providers and beneficiaries, controlling for any changes in case mix and contextual factors between the pre- and post-PPS time periods.

The project will build on and expand the literature on how third party payment incentives affect care delivery and patient outcomes in a setting where providers have responded strongly to financial incentives. It will provide critically needed information for policymakers charged with designing and adjusting payment systems and could improve the lives of the millions of Medicare beneficiaries who need home health care.

Sponsor: The Changes in Health Care Financing and Organization (HCFO)
Initiative of The Robert Wood Johnson Foundation