The impact of Medicaid reimbursement policy on subacute care in hospitals.

Concerns about the increasing cost of hospital care have directed policy attention to inappropriate hospital use and, in particular, to hospital patients awaiting long-term care (LTC) placement. In 1982, pursuant to changes in federal Medicare and Medicaid law, Maine implemented changes in Medicaid reimbursement policy for subacute patients designed to reduce hospital backups and corresponding Medicaid expenditures for unnecessary hospital care. This article evaluates the impact of this change in Medicaid hospital payment policy on the volume of subacute patient days and the length of subacute stays (LOS) in Maine. Although declines in Medicaid expenditures, total subacute days, and LOS of patients awaiting LTC placement were observed in the 1st year of the policy, study findings do not show a statistically significant impact of the policy on the length of patients' subacute stays. Patient diagnosis of mental and nervous system disorders and nursing home occupancy rates in the hospital service area were both significant predictors of subacute LOS. Study findings indicate that efforts to reduce hospital backups must address specific barriers to timely LTC placement, including shortages of institutional and noninstitutional LTC services, and the lack of financial incentives for LTC providers to accept heavier care patients.