Medicare's Prospective Payment System (PPS) includes an adjustment that provides additional payments to hospitals that serve a disproportionately large share of low-income patients. the principal rationale for this adjustment is that low-income patients are costlier to treat, controlling for DRG. Only a few studies have directly examined this issue, however. These studies differ both over whether or not low-income patients are costlier to treat, and, if so, over how much costlier. The purpose of this study was to provide a more precise answer to these questions using data from the universe of low-income Medicare beneficiaries. Our findings indicate that, on average, low-income Medicare patients do not have costlier hospital stays compared to other Medicare patients. Overall, they had costs that were 0.20 percent lower than other Medicare patients.
Kominski, Gerald and Stephen H. Long, Do Low-Income Medicare Patients Have Costlier Hospital Stays? Santa Monica, CA: RAND Corporation, 1993. https://www.rand.org/pubs/drafts/DRU418.html.
Kominski, Gerald and Stephen H. Long, Do Low-Income Medicare Patients Have Costlier Hospital Stays? RAND Corporation, DRU-418-HCFA, 1993. As of November 29, 2023: https://www.rand.org/pubs/drafts/DRU418.html