Over the study period the wage index has improved in its control for variation across hospitals in the reporting of benefits, in the mix of PPS to non-PPS
employees, and in the use of contract labor.
The OIG said it believed that there was a connection between the discount and referrals of other federal healthcare program business, and stated, "Both parties have obvious motives for agreeing to trade discounts on PPS business for referrals of non-PPS business: the SNFs to minimize risk of losses under the PPS system and Ambulance Company X to secure business in a highly competitive market." Essentially, OIG found that receiving too large a discount on PPS services in exchange for referring the vendor other non-PPS business that did not receive the same discount was illegal.
Is the discount conditioned on the provider guaranteeing the contractor other non-PPS business?
This specification includes a PPS dummy variable (1 in 1984 and after, for cases from PPS states), a non-PPS
state dummy variable (1 in all years if the case is from a non-PPS
state), and a set of time (year) dummy variables to capture trends.