Regulatory Exploitation and Management Changes: Upcoding in the Hospital Industry
AbstractThis paper investigates whether management teams that fail to exploit regulatory loopholes are vulnerable to replacement. We use the U.S. hospital industry in 1985-96 as a case study. A 1988 change in Medicare rules widened a preexisting loophole in the Medicare payment system, presenting hospitals with an opportunity to increase operating margins by 5 or more percentage points simply by "upcoding" patients to more lucrative codes. We find that having room to upcode is a statistically and economically significant predictor of whether a hospital replaces its management with a new team of for-profit managers. We also find evidence that hospitals that replace their management subsequently upcode more than a sample of similar hospitals whose management did not change. (c) 2009 by The University of Chicago. All rights reserved..
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Bibliographic InfoArticle provided by University of Chicago Press in its journal The Journal of Law and Economics.
Volume (Year): 52 (2009)
Issue (Month): 2 (05)
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Web page: http://www.journals.uchicago.edu/JLE/
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- Giorgio Vittadini & Paolo Berta & Gianmaria Martini & Giuditta Callea, 2012. "The effect of a law limiting upcoding on hospital admissions: evidence from Italy," Empirical Economics, Springer, vol. 42(2), pages 563-582, April.
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