Medicare's Prospective Payment System: The Expectations and the Realities

On November 6 and 7, 1986, a group of individuals involved with the planning, legislation, and implementation of Medicare's prospective payment system (PPS) gathered in Annapolis, Maryland, to assess the three-year-old program and to attempt to predict its future course. What were the expectations of those who designed the PPS program, and has it lived up to those expectations? What is its track record to date in curtailing the spiraling costs of health care? Does it threaten to reduce the level of quality of care to which elderly Americans have become accustomed? Can it keep pace with demographic changes and the needs of a fiscally constrained health care system? The following overview and three papers with commentaries, presented during the Annapolis symposium, address these issues and others affecting the PPS program. The two-day gathering was sponsored by the Health Industry Manufacturers Association, a national trade association for domestic manufacturers of medical devices and in vitro diagnostic products.