IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v25y2011i2p69-92.html
   My bibliography  Save this article

Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?

Author

Listed:
  • Mark McClellan

Abstract

This paper focuses on a broad movement toward a fundamentally different way of paying healthcare providers. The approach reaches beyond the old dichotomies about whether healthcare providers are reimbursed on a fee-for-service or a "capitated" or per-person payment. Instead, these reforms seek to create direct linkages between payments to healthcare providers and measures of the quality and efficiency of care. After an overview of payment reforms for healthcare providers and their welfare implications, this paper discusses a range of empirical studies. These often small-scale studies suggest that provider payment reforms in conjunction with greater attention to improving measurements of care quality and outcomes can have a significant impact on quality of care and, in some cases, resource use and costs of care.

Suggested Citation

  • Mark McClellan, 2011. "Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 69-92, Spring.
  • Handle: RePEc:aea:jecper:v:25:y:2011:i:2:p:69-92
    Note: DOI: 10.1257/jep.25.2.69
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.2.69
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Florian Heiss & Daniel McFadden & Joachim Winter, 2009. "Regulation of private health insurance markets: Lessons from enrollment, plan type choice, and adverse selection in Medicare Part D," NBER Working Papers 15392, National Bureau of Economic Research, Inc.
    2. Mark McClellan, 1997. "Hospital Reimbursement Incentives: An Empirical Analysis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 91-128, March.
    3. Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 93-113, Fall.
    4. David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 935-963, December.
    5. Ashly D Black & Josip Car & Claudia Pagliari & Chantelle Anandan & Kathrin Cresswell & Tomislav Bokun & Brian McKinstry & Rob Procter & Azeem Majeed & Aziz Sheikh, 2011. "The Impact of eHealth on the Quality and Safety of Health Care: A Systematic Overview," PLOS Medicine, Public Library of Science, vol. 8(1), pages 1-16, January.
    6. Cutler, David M, 1995. "The Incidence of Adverse Medical Outcomes under Prospective Payment," Econometrica, Econometric Society, vol. 63(1), pages 29-50, January.
    7. Amy Finkelstein, 2007. "The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 1-37.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    2. Daron Acemoglu & Amy Finkelstein, 2008. "Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 837-880, October.
    3. Bäuml, Matthias & Kümpel, Christian, 2020. "Hospital responses to the introduction of reimbursements by treatment intensity in a (presumably lump sum) DRG system," hche Research Papers 2020/22, University of Hamburg, Hamburg Center for Health Economics (hche).
    4. Cox, James C. & Sadiraj, Vjollca & Schnier, Kurt E. & Sweeney, John F., 2016. "Higher quality and lower cost from improving hospital discharge decision making," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 1-16.
    5. Vislie, Jon, 2009. "Incentive Contracts for Public Health Care Provision under Adverse Selection and Moral Hazard," HERO Online Working Paper Series 2001:6, University of Oslo, Health Economics Research Programme.
    6. Liran Einav & Amy Finkelstein & Yunan Ji & Neale Mahoney, 2020. "Randomized trial shows healthcare payment reform has equal-sized spillover effects on patients not targeted by reform," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 117(32), pages 18939-18947, August.
    7. Matthias Bäuml & Christian Kümpel, 2021. "Hospital responses to the refinement of reimbursements by treatment intensity in DRG systems," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 585-602, March.
    8. David Meltzer & Jeanette Chung, 2002. "Effects of Competition Under Prospective Payment on Hospital Costs Among High- and Low-Cost Admissions: Evidence from California, 1983 and 1993," NBER Chapters, in: Frontiers in Health Policy Research, Volume 5, pages 53-102, National Bureau of Economic Research, Inc.
    9. Kaestner, Robert & Guardado, Jose, 2008. "Medicare reimbursement, nurse staffing, and patient outcomes," Journal of Health Economics, Elsevier, vol. 27(2), pages 339-361, March.
    10. Somi Shin, 2021. "Healthcare provider response to payment system reform: evidence from New Zealand," SN Business & Economics, Springer, vol. 1(11), pages 1-29, November.
    11. Avi Dor & William Encinosa & Kathleen Carey, 2020. "Hospital performance standards and medical pricing: The impact of information disclosure in cardiac care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 492-515, July.
    12. Edward C. Norton & Courtney Harold Van Houtven & Richard C. Lindrooth & Sharon‐Lise T. Normand & Barbara Dickey, 2002. "Does prospective payment reduce inpatient length of stay?," Health Economics, John Wiley & Sons, Ltd., vol. 11(5), pages 377-387, July.
    13. Galina Besstremyannaya, 2013. "Heterogeneous hospital response to a per diem prospective payment system," Working Papers w0193, New Economic School (NES).
    14. Susan Feng Lu, 2012. "Multitasking, Information Disclosure, and Product Quality: Evidence from Nursing Homes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 673-705, September.
    15. Charles Courtemanche & James Marton & Benjamin Ukert & Aaron Yelowitz & Daniela Zapata, 2018. "Early Effects of the Affordable Care Act on Health Care Access, Risky Health Behaviors, and Self‐Assessed Health," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 660-691, January.
    16. Tahir Andrabi & Jishnu Das & Asim Ijaz Khwaja, 2017. "Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets," American Economic Review, American Economic Association, vol. 107(6), pages 1535-1563, June.
    17. Xu Guan & Yulan Wang & Zelong Yi & Ying‐Ju Chen, 2020. "Inducing Consumer Online Reviews Via Disclosure," Production and Operations Management, Production and Operations Management Society, vol. 29(8), pages 1956-1971, August.
    18. Pierre-Thomas Léger & Erin C. Strumpf, 2010. "Système de paiement des médecins : bref de politique," CIRANO Project Reports 2010rp-12, CIRANO.
    19. Christoph Schwierz & Boris Augurzky & Axel Focke & Jürgen Wasem, 2012. "Demand, selection and patient outcomes in German acute care hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 21(3), pages 209-221, March.
    20. Jeremy Bertomeu & Igor Vaysman & Wenjie Xue, 2021. "Voluntary versus mandatory disclosure," Review of Accounting Studies, Springer, vol. 26(2), pages 658-692, June.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:25:y:2011:i:2:p:69-92. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.