The Effect of Benefit Design on the Length of Stay of Medicaid Psychiatric Patients

This paper examines the factors affecting the length of stay of Medicaid psychiatric patients with a model of supply responses to different patient, environmental, and regulatory characteristics. The results indicate that providers respond to limitations in both coverage and reimbursement. Treatment of psychiatric patients is found to respond strongly to financial incentives, suggesting that in any study of the length of stay of psychiatric patients, the structure of their insurance coverage must be considered. This finding makes it difficult to infer medically appropriate patterns of care from observed length-of-stay data. (Summer 1986)