The New Era of Prospective Payment for Hospitals

Abstract

The federal government, facing massive budget deficits and the expectation that Medicare costs will double to $110 billion by 1987 if there are no changes in present trends, has approved another round of sweeping policies to curtail this growth and, for the first time, to begin the process of reordering the economic incentives that have driven the program since its creation. As a consequence of these changes, arrived at with strong bipartisan support and industry acquiescence, hospitals, skilled nursing homes, and (inevitably) physicians will be placed at greater financial risk for their medical actions.Congress adopted the measures as part . . .