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  • Title: Effects of the Medicare prospective payment system on hospital cost containment: an early appraisal.
    Author: Sloan FA, Morrisey MA, Valvona J.
    Journal: Milbank Q; 1988; 66(2):191-220. PubMed ID: 3054469.
    Abstract:
    In 1983 federal efforts to contain hospital costs were coalesced under the Medicare prospective payment system (PPS)--a "self-interest" approach to administered prices. Diagnosis-related groups (DRGs) and the tougher peer review organizations (PROs) serve to define "products"; PPS sets the price on each. The effects of PPS go beyond Medicare; they have been system-wide. Differential impacts on hospital utilization, substitution of capital for labor, and quality are examined through a variety of data sources and descriptive as well as regression analyses. The greatest cost savings are attributed to a reduction in hospital admissions per capita.
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