Strategic Coding in the Assessment of Long‐Term Care Needs: Evidence From France

There is strong evidence of “upcoding” whereby health care providers overstate the severity of disease to increase billing revenue. Much less is known about strategic coding in the assessment of patient eligibility for long‐term care. This paper takes advantage of a unique French linked survey dataset to document how patient assessment depends critically on the incentives of the assessing agents. I find that nursing homes assess their patients to be more disabled (thus increasing their revenue) compared to community assessors who seek to minimize disability payments levels. Public hospital‐owned long‐term care facilities are more likely to overrate disability levels; there is also evidence that cognitively impaired or socially disadvantaged patients exhibit more disability upcoding. In the context of nursing homes, upcoding might be read as “side‐coding,” driven by flaws in the assessment tool that does not allow the care provider to adequately fund the time they spend on these patients. Conversely, assessors of patients living in the community could downcode disability to shift some of the care tasks to informal caregivers.