Medicare\u27s Prospective Payment System at Age Eight: Mature Success or Midlife Crisis?

This Article is necessarily a rather selective (for reasons of brevity and reader tolerance) and even subjective attempt to summarize the experience under PPS to date and to suggest some lessons that might be drawn from that experience for the future reform of PPS itself and of payment systems generally. No attempt will be made here to be comprehensive, to explain all the technical details of an inherently and increasingly complex system, nor even to systematically survey the rapidly growing body of literature. But the few issues and themes that clearly stand out will be the focus of most of this paper. The paper begins with a review of the aggregate data on PPS\u27s performance since its inception, looking at the effects both on the payor, Medicare, and the payees, the nation\u27s hospitals. It will then consider some of the distributional patterns of benefits and losses potentially concealed by those aggregate figures. The issues of quality and access and the related impacts of the system on health care generally will then be quickly considered. This will be followed by a more evaluative consideration of the major strengths and weaknesses of PPS and a consideration of future directions for the program

Medicare\u27s Prospective Payment System at Age Eight: Mature Success or Midlife Crisis?

This Article is necessarily a rather selective (for reasons of brevity and reader tolerance) and even subjective attempt to summarize the experience under PPS to date and to suggest some lessons that might be drawn from that experience for the future reform of PPS itself and of payment systems generally. No attempt will be made here to be comprehensive, to explain all the technical details of an inherently and increasingly complex system, nor even to systematically survey the rapidly growing body of literature. But the few issues and themes that clearly stand out will be the focus of most of this paper. The paper begins with a review of the aggregate data on PPS\u27s performance since its inception, looking at the effects both on the payor, Medicare, and the payees, the nation\u27s hospitals. It will then consider some of the distributional patterns of benefits and losses potentially concealed by those aggregate figures. The issues of quality and access and the related impacts of the system on health care generally will then be quickly considered. This will be followed by a more evaluative consideration of the major strengths and weaknesses of PPS and a consideration of future directions for the program