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Controlling Medicaid costs in hospitals.

When the Medicaid program began over two decades ago, states paid hospitals for providing service to Medicaid recipients on the same type of cost-reimbursement basis as did other third-party payers reimbursing hospital expenses for the general population. The intent was to weaken the dependence of the poor on public hospitals and to provide access to mainstream medicine. Since then, the need to control state spending generally, and Medicaid spending in particular, has led most states to constrain Medicaid payments to hospitals by implementing some form of prospective payment system. To the extent Medicaid hospital payment rates tend to be lower than the payment rates hospitals receive for Medicare and private patients, many hospitals may be less willing to take Medicaid patients, and access to care for those patients may become increasingly limited. The purpose of this DataWatch is to identify how Medicaid utilization differs from that of the general population and to discuss the implications of those differences for issues of access and the prospects of future Medicaid cost-control efforts. We use data from the 1984 American Hospital Association (AHA) annual survey to examine hospital utilization patterns of Medicaid recipients. Of the 7,110 hospitals surveyed in the 1984 AHA annual survey, we selected short-term, general medical and surgical hospitals located in the fifty states and the District of Columbia. This sample consisted of 5,645 hospitals, 79.4 percent of the total survey universe. Hospitals with implausible data, such as if Medicaid admissions exceeded days or total admissions exceeded days, were excluded. This reduced the sample by 12 percent to the 4,987 hospitals on which this analysis is based. The first section provides a brief overview of the distribution of different types of hospitals by geographic region to provide a general