Did postoperative mortality increase after the implementation of the Medicare Balanced Budget Act?

Med Care. 2006 Jun;44(6):527-33. doi: 10.1097/01.mlr.0000215886.49343.c6.


Background: The Balanced Budget Act (BBA) of 1997 was a cost-saving measure designed to reduce Medicare reimbursements by $116.4 billion from 1998 to 2002. Resulting financial strain could adversely affect the quality of patient care in hospitals.

Objective: We sought to determine whether 30-day mortality rates for surgical patients who developed complications changed at different rates in hospitals under different levels of financial strain from the BBA.

Methods: Pennsylvania hospital discharge data, financial data, and death certificate data from 1997 to 2001 were obtained. A retrospective multivariate analysis examined whether 30-day mortality rates from 8 postoperative complications varied based on degree of hospital financial strain.

Results: The average magnitude of Medicare payment reduction on overall hospital net revenues was estimated at 1.8% for hospitals with low BBA impact and 3.5% for hospitals with high impact in 1998, worsening to 2.0% and 4.8%, respectively, by 2001. Mortality rates changed at similar rates for high- and low-impact hospitals from 1997 to 1999, but from 1997 to 2000 mortality rates increased more among patients in high-impact compared with low-impact hospitals (P<0.05). From 2000 to 2001, mortality rates among impact groups converged. There were no statistically significant differences based on BBA impact in changes in nursing staff or length of stay.

Conclusions: The mortality of surgical patients who developed postoperative complications increased to a greater degree in the short term in hospitals affected more by BBA. Measuring the quality impact of reimbursement cuts is necessary to understand cost-quality tradeoffs that may accompany cost-saving reforms.

Publication types

  • Research Support, Non-U.S. Gov't
  • Research Support, U.S. Gov't, Non-P.H.S.

MeSH terms

  • Aged
  • Health Care Reform / legislation & jurisprudence
  • Hospital Administration / economics*
  • Hospital Mortality
  • Humans
  • Medicare / economics*
  • Medicare / legislation & jurisprudence*
  • Pennsylvania
  • Postoperative Complications / economics*
  • Postoperative Complications / mortality*
  • Quality of Health Care / economics
  • Quality of Health Care / legislation & jurisprudence
  • Retrospective Studies