DESCRIPTION (provided by applicant): Each year, more than ten million Medicare beneficiaries are discharged from acute care hospitals into post-acute care settings including inpatient rehabilitation facilities, skilled nursing facilities, and homes with services from home health agencies. These beneficiaries include some of the frailest and most vulnerable elders, many of whom have suffered from an acute event such as a stroke or a fall, all of whom are judged unable to return to their homes without further care. Whether beneficiaries receive post-acute care (PAC) and the type and intensity of care they receive is profoundly influenced by Medicare's methods of payment. Consequently, payment changes will certainly affect the outcomes of post-acute care. How large those effects are and how they operate, however, are virtually unknown. The goal of this study is to answer these important questions. The proposed study will use linked Medicare administrative data to examine how changes in payment for post-acute care affected post-acute care utilization, costs, and outcomes for patients with three tracer conditions: stroke, hip fracture, and lower extremity joint replacement. These conditions are the top three conditions receiving post-acute care and together account for 25% of all beneficiaries receiving PAC. The proposed study aims to analyze: Aim 1) How changes in payment systems affected overall payments for, costs of, and outcomes of episodes of post-acute care for Medicare patients discharged alive from an acute care stay in a hospital with the three tracer conditions. Aim 2) The determinants of choice of PAC setting, and how they are affected by patient characteristics, discharging hospital characteristics, PAC facility characteristics, and payment policy changes. Aim 3) The extent to which payment policy changes affected our clinical and financial outcomes of interest through changes in the sites where patients received care versus changes in outcomes conditional on care site. Understanding how changes in Medicare's payment methods have affected use of and outcomes of PAC is important so that we can more fully appreciate the consequences of recent policy initiatives. Moreover, payment changes are usually driven by policymakers' responses to the cost of the Medicare program, and post-acute care now represents about 10% of that total. As Congress seeks to contain Medicare spending, payment for post-acute care may well tighten. The proposed project will help us to understand how such changes might affect seniors; it will be the first study to consider the full range of PAC options over the time period in which the PAC payment systems changed. It will also be the first to consider the effects of payment changes on multiple important health outcomes.