This article reports findings from a multistate study of the effects of medical cost containment
policy, particularly the Medicare DRG (Diagnosis Related Groups) reimbursement policy, on
community-based services for the elderly. The study findings reveal that since the implementation ofDRGs, more older clients in poorer states ofhealth are seeking posthospital care services.
Greater client demand and illness acuity is leading to increases m service refusals to vulnerable
clients and the creation of agency waiting lists. The majority of agency directors attribute the
declinmg health status of clients to DRG reimbursement.
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