Medicare expenditures and utilization under State hospital rate setting

In this study we analyzed the National Hospital Rate-Setting Study findings concerning the effects of State prospective reimbursement (PR) programs on Medicare expenditures and utilization; we used Medicare beneficiary-based data compiled from a sample of approximately 1,300 counties in States with and without rate-setting programs for the 5-year period 1974-78. The statistical evidence suggests that stringent PR programs have not resulted in hospitals using Medicare to cross-subsidize losses elsewhere. In addition, it appears that Medicare has been a passive recipient of the same kinds of regulatory benefits accruing to PR-covered patients (i.e., costs and intensity of care have been constrained).