Medicare's PPS Implementation and Increase in Recording of Psychotic Depressive Disorder

Demonstrates the large increase in psychotic depression and corresponding decrease in the diagnosis of neurotic depression after Medicare's hospital-based Prospective Payment System (PPS) was implemented. The RAND authors express a viewpoint that some of this shift may actually represent a true change to a higher degree of severity of illness at the time of hospital admission or represent upcoding to capture more payment under PPS. In any case, more work needs to be done to understand the implication of this finding for maintaining and running a regulated system, such as the PPS Diagnosis Related Group (DRG) Medicare system.