Prospective payment system and quality: Early results and research strategy

The implementation of the prospective payment system (PPS) in Medicare has raised concerns in both the public and private health sectors about the potential for compromised quality of care resulting from the financial incentives inherent in the system. As part of this concern, Congress has mandated annual reports from the Health Care Financing Administration (HCFA) on the impact of PPS, including the impact on Medicare beneficiaries. In order to meet this mandate, HCFA has initiated several studies concerning quality of care issues. Those activities and selected results from the 1985 PPS impact report are presented in this article.