The Effect of Medicare's Prospective Payment System on Patient Satisfaction: An Illustration with Four Rehabilitation Hospitals

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To examine the impact of Medicare’s Prospective Payment System (PPS) on patient satisfaction at four inpatient rehabilitation hospitals.


Prospective study using a satisfaction survey to examine the effects of Medicare’s PPS for rehabilitation hospitals. Surveys were conducted at four affiliated rehabilitation hospitals in the Midwest.


Patient characteristics varied only slightly pre- to post-PPS, and several characteristics were related to overall satisfaction, including motor functional gain, discharge to home, and respondent (patient or proxy). A 12-point increase on a 12-item motor function scale resulted in 1.13 greater odds (95% CI: 1.04, 1.24) of reporting excellent satisfaction. Patient respondents were 1.27 times more likely (95% CI: 1.07, 1.50) than proxies to report excellent satisfaction, and patients discharged home were 1.65 times more likely (95% CI: 1.31, 2.07) to report excellent satisfaction than patients discharged elsewhere. We found an increase in observed satisfaction from 60.3 to 63.4% (P < 0.05) after PPS implementation, despite a decrease in motor FIM gain.


Patient characteristics such as motor FIM gain, discharge status, and respondent type were significantly associated, although only slightly, with patient satisfaction in inpatient rehabilitation. Percentage of excellent satisfaction improved at these four facilities after PPS implementation, despite declines in motor FIM gain. The improvement may be the result of numerous ongoing quality-improvement initiatives directed at improving patient satisfaction at these facilities.

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