Medicare Payment Reform and Provider Entry and Exit in the Post-Acute Care Market
Article first published online: 5 APR 2013
© Health Research and Educational Trust
Health Services Research
Volume 48, Issue 5, pages 1557–1580, October 2013
How to Cite
Huckfeldt, P. J., Sood, N., Romley, J. A., Malchiodi, A. and Escarce, J. J. (2013), Medicare Payment Reform and Provider Entry and Exit in the Post-Acute Care Market. Health Services Research, 48: 1557–1580. doi: 10.1111/1475-6773.12059
- Issue published online: 16 SEP 2013
- Article first published online: 5 APR 2013
To understand the impacts of Medicare payment reform on the entry and exit of post-acute providers.
Medicare Provider of Services data, Cost Reports, and Census data from 1991 through 2010.
We examined market-level changes in entry and exit after payment reforms relative to a preexisting time trend. We also compared changes in high Medicare share markets relative to lower Medicare share markets and for freestanding relative to hospital-based facilities.
Data Extraction Methods
We calculated market-level entry, exit, and total stock of home health agencies, skilled nursing facilities, and inpatient rehabilitation facilities from Provider of Services files between 1992 and 2010. We linked these measures with demographic information from the Census and American Community Survey, information on Certificate of Need laws, and Medicare share of facilities in each market drawn from Cost Report data.
Payment reforms reducing average and marginal payments reduced entries and increased exits from the market. Entry effects were larger and more persistent than exit effects. Entry and exit rates fluctuated more for home health agencies than skilled nursing facilities. Effects on number of providers were consistent with entry and exit effects.
Payment reform affects market entry and exit, which in turn may affect market structure, access to care, quality and cost of care, and patient outcomes. Policy makers should consider potential impacts of payment reforms on post-acute care market structure when implementing these reforms.