A comprehensive payment model for short- and long-stay psychiatric patients.

In this article, a payment model is developed for a hospital system with both acute- and chronic-stay psychiatric patients. "Transition pricing" provides a balance between the incentives of an episode-based system and the necessity of per diem long-term payments. Payment is dependent on two new psychiatric resident classification systems for short- and long-term stays. Data on per diem cost of inpatient care, by day of stay, was computed from a sample of 2,968 patients from 100 psychiatric units in 51 Department of Veterans Affairs (VA) Medical Centers. Using a 9-month cohort of all VA psychiatric discharges nationwide (79,337 with non-chronic stays), profits and losses were simulated.