Impact of the Medicare prospective payment system for hospitals

This article describes some of the available evidence on the impact of the Medicare prospective payment system (PPS) for hospitals during its first year, on hospitals, other payers for inpatient hospital services, other providers of health care, and Medicare beneficiaries. In addition, because the impetus for the enactment of the new system stemmed from concern over the financial status of the Medicare program, the first-year impact of PPS on Medicare program expenditures is also described.