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Did hospitals respond to changes in weights of Diagnosis Related Groups in Norway between 2006 and 2013?

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  • Melberg, Hans Olav
  • Beck Olsen, Camilla
  • Pedersen, Kine

Abstract

It has been argued that activity based payment systems make hospitals focus on the diagnostic groups that are most beneficial given costs and reimbursement rates. This article tests this hypothesis by exploring the relationship between changes in the reimbursement rates and changes in the number of registered treatment episodes for all diagnosis-related groups in Norway between 2006 and 2013. The number of treatment episodes can be affected by many factors and in order to isolate the effect of changes in the reimbursement system, we exclude DRGs affected by policy reforms and administrative changes. The results show that hospitals increased the number of admissions in a specific DRG four times more when the reimbursement was increased, relative to the change for DRGs with reduced rates. The direction of the result was consistent across time periods and sub-groups such as surgical vs. medical, and inpatient vs. outpatient DRGs. The effect was smaller, but remained significant after eliminating DRGs that were most likely to be affected by upcoding. Activities that the hospital had little control over, such as the number of births, had small effects, while activity levels in more discretionary categories, for instance mental diseases, were more affected. This demonstrates that contrary to the wishes of policy makers the economic incentives affect hospital reporting and priority setting behavior.

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  • Melberg, Hans Olav & Beck Olsen, Camilla & Pedersen, Kine, 2016. "Did hospitals respond to changes in weights of Diagnosis Related Groups in Norway between 2006 and 2013?," Health Policy, Elsevier, vol. 120(9), pages 992-1000.
  • Handle: RePEc:eee:hepoli:v:120:y:2016:i:9:p:992-1000
    DOI: 10.1016/j.healthpol.2016.07.013
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    3. Huitfeldt, Ingrid, 2021. "Hospital reimbursement and capacity constraints: Evidence from orthopedic surgeries," Health Policy, Elsevier, vol. 125(6), pages 732-738.
    4. Qian, Mengcen & Zhang, Xinyu & Chen, Yajing & Xu, Su & Ying, Xiaohua, 2021. "The pilot of a new patient classification-based payment system in China: The impact on costs, length of stay and quality," Social Science & Medicine, Elsevier, vol. 289(C).
    5. Kjøstolfsen, Gjertrud Hole & Baheerathan, Janusha & Martinussen, Pål E. & Magnussen, Jon, 2021. "Financial incentives and patient selection: Hospital physicians’ views on cream skimming and economic management focus in Norway," Health Policy, Elsevier, vol. 125(1), pages 98-103.
    6. Chien, Ling-Chen & Chou, Yiing-Jenq & Huang, Yu-Chin & Shen, Yi-Jung & Huang, Nicole, 2020. "Reducing low value services in surgical inpatients in Taiwan: Does diagnosis-related group payment work?," Health Policy, Elsevier, vol. 124(1), pages 89-96.
    7. Buczak-Stec, Elżbieta & Goryński, Paweł & Nitsch-Osuch, Aneta & Kanecki, Krzysztof & Tyszko, Piotr, 2017. "The impact of introducing a new hospital financing system (DRGs) in Poland on hospitalisations for atherosclerosis: An interrupted time series analysis (2004–2012)," Health Policy, Elsevier, vol. 121(11), pages 1186-1193.
    8. Cook, Amanda & Averett, Susan, 2020. "Do hospitals respond to changing incentive structures? Evidence from Medicare’s 2007 DRG restructuring," Journal of Health Economics, Elsevier, vol. 73(C).
    9. András Kiss & Norbert Kiss & Balázs Váradi, 2023. "Do budget constraints limit access to health care? Evidence from PCI treatments in Hungary," International Journal of Health Economics and Management, Springer, vol. 23(2), pages 281-302, June.

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