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Medicare payment and hospital capital: future policy options.

Prologue: At a time when hospitals are largely consumed by the challenging task of implementing Medicare's prospective payment system (PPS), the Reagan administration is putting the finishing touches on a report to Congress which will recommend how capital payments should be incorporated into the new payment scheme. Congress established a deadline of October 1, 1986, for enacting new hospital capital legislation. In this article, two well-respected economists who are often consulted by the public and private sectors for approaches to complicated policy problems, set out options that Congress will consider when it turns to the hospital capital issue. Until one year ago, Gerard Anderson was a central figure within the Department of Health and Human Services (DHHS) in the development of the administrations prospective payment policy. Over the course of his six-year stint at the department, Anderson served four assistant secretaries in a similar technical capacity, thus demonstrating an ability to bridge a br...