The Decision to Seek an Exemption from PPS

This paper examines the receipt of exemptions from Medicare's Prospective Payment System (PPS) for distinct part psychiatric units of general hospitals. A logit model of the exemption status of 1,045 psychiatric units is estimated using 1984 data. The results suggest that units that were expected to profit from a change in payment method (cost based on PPS) were least likely to obtain an exemption from PPS. (June 1988)