The initial effects of the prospective payment system on nursing home patients.

We examined the discharge outcomes and admission characteristics of patients admitted to Southern California skilled nursing facilities (SNFs) for the first time following an episode of hospitalization in 1980, 1982-83 (all pre-prospective payment system), and all admissions during July through September 1984 (post-prospective payment). The proportion of patients covered by Medicare on admission was 18 per cent in 1980, 36 per cent in 1982-83, and 57 per cent in 1984. For patients discharged within 30-60 days to SNFs, in all three time periods more Medicare than non-Medicare patients were bed-bound, had indwelling catheters, and were comatose. There were only modest case-mix differences between the groups and no changes over time in discharge outcomes, including the proportion dying in the SNF, or being returned to a hospital. The time-related changes that were found preceded the implementation of the diagnosis related group (DRG) based prospective payment system.