IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-02317416.html
   My bibliography  Save this paper

From downcoding to upcoding: DRG based payment in hospitals

Author

Listed:
  • Carine Milcent

    () (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

A prospective disease group-based payment is a reimbursement rule used in a wide array of countries. It turns to be the hospital’s payment rule to imply. The secret of this payment is a fee payment as well as a hospital’s activity based payment. There is a consensus to consider this rule of payment as the least likely to be manipulated by the actors. However, the defined fee per group depends on recorded information that is then processed using complex algorithms. What if the data itself can be manipulated? The result would be a fee per group based on manipulated factors that would lead to an inefficient budget allocation between hospitals. Using a unique French longitudinal database with 145 million stays, I unambiguously demonstrate that the implementation of a finer classification led to an upcoding-learning effect. The end result has been a budget transfer from public non-research hospitals to for-profit hospitals. The 2009 policy lead to upcoding disconnected from any changes in the trend of production of care.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," Working Papers halshs-02317416, HAL.
  • Handle: RePEc:hal:wpaper:halshs-02317416
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02317416
    as

    Download full text from publisher

    File URL: https://halshs.archives-ouvertes.fr/halshs-02317416/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chalkley, Martin & Malcomson, James M., 1998. "Contracting for health services when patient demand does not reflect quality," Journal of Health Economics, Elsevier, vol. 17(1), pages 1-19, January.
    2. Anne Mason & Zeynep Or & Thomas Renaud & Andrew Street & Josselin Thuilliez & Padraic Ward & ON BEHALF OF THE EURODRG GROUP, 2012. "How Well Do Diagnosis‐Related Groups For Appendectomy Explain Variations In Resource Use? An Analysis Of Patient‐Level Data From 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 30-40, August.
    3. Siciliani, Luigi, 2006. "Selection of treatment under prospective payment systems in the hospital sector," Journal of Health Economics, Elsevier, vol. 25(3), pages 479-499, May.
    4. Georgescu, Irène & Hartmann, Frank G.H., 2013. "Sources of financial pressure and up coding behavior in French public hospitals," Health Policy, Elsevier, vol. 110(2), pages 156-163.
    5. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2012. "Quality competition with profit constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 642-659.
    6. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2011. "Hospital Competition and Quality with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(2), pages 444-469, June.
    7. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
    8. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
    9. Carine Milcent, 2017. "Premier bilan de la tarification à l’activité (T2A) sur la variabilité des coûts hospitaliers," Economie & Prévision, La Documentation Française, vol. 0(1), pages 45-67.
    10. Mougeot, Michel & Naegelen, Florence, 2008. "Supply-side risk adjustment and outlier payment policy," Journal of Health Economics, Elsevier, vol. 27(5), pages 1196-1200, September.
    11. Carine Milcent, 2017. "Premier bilan de la T2A sur la variabilité des coûts hospitaliers," Working Papers halshs-01649554, HAL.
    12. Xirasagar, Sudha & Lin, Herng-Ching, 2006. "Effects of payment incentives, hospital ownership and competition on hospitalization decisions for ambulatory surgical procedures," Health Policy, Elsevier, vol. 76(1), pages 26-37, March.
    13. Anne Mason & Zeynep Or & Thomas Renaud & Andrew Street & Josselin Thuilliez & Padraic Ward & ON BEHALF OF THE EURODRG GROUP, 2012. "How Well Do Diagnosis‐Related Groups For Appendectomy Explain Variations In Resource Use? An Analysis Of Patient‐Level Data From 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 30-40, August.
    14. Pedro Barros & Gisele Braun, 2017. "Upcoding in a National Health Service: the evidence from Portugal," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 600-618, May.
    15. Reinhard Busse & Alexander Geissler & Anne Mason & Zeynep Or & David Scheller‐Kreinsen & Andrew Street & Unto Häkkinen & Pietro Chiarello & Francesc Cots & Mikko Peltola & Hanna Rättö, 2012. "Patient Classification And Hospital Costs Of Care For Acute Myocardial Infarction In Nine European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21, pages 19-29, August.
    16. Mark Duggan, 2002. "Hospital Market Structure and the Behavior of Not-For-Profit Hospitals," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 433-446, Autumn.
    17. Kuhn, Michael & Siciliani, Luigi, 2008. "Upcoding and Optimal Auditing in Health Care (or The economics of DRG creep)," CEPR Discussion Papers 6689, C.E.P.R. Discussion Papers.
    18. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    19. Irène Georgescu & Frank G.H. Hartmann, 2013. "Sources of financial pressure and up coding behavior in French public hospitals," Post-Print hal-02100570, HAL.
    20. Pope, Gregory C., 1989. "Hospital nonprice competition and medicare reimbursement policy," Journal of Health Economics, Elsevier, vol. 8(2), pages 147-172, June.
    21. Steinbusch, Paul J.M. & Oostenbrink, Jan B. & Zuurbier, Joost J. & Schaepkens, Frans J.M., 2007. "The risk of upcoding in casemix systems: A comparative study," Health Policy, Elsevier, vol. 81(2-3), pages 289-299, May.
    22. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    23. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
    24. Boyd H. Gilman, 2000. "Hospital response to DRG refinements: the impact of multiple reimbursement incentives on inpatient length of stay," Health Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 277-294, June.
    25. Unto Häkkinen & Pietro Chiarello & Francesc Cots & Mikko Peltola & Hanna Rättö & ON BEHALF OF THE EURODRG GROUP, 2012. "Patient Classification And Hospital Costs Of Care For Acute Myocardial Infarction In Nine European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 19-29, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 22nd March 2021
      by Chris Sampson in The Academic Health Economists' Blog on 2021-03-22 12:00:01

    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. Carine Milcent, 2016. "Upcoding and heterogeneity in hospitals’ response: A Natural Experiment," PSE Working Papers halshs-01340557, HAL.
    2. Jurgita Januleviciute & Jan Erik Askildsen & Oddvar Kaarboe & Luigi Siciliani & Matt Sutton, 2016. "How do Hospitals Respond to Price Changes? Evidence from Norway," Health Economics, John Wiley & Sons, Ltd., vol. 25(5), pages 620-636, May.
    3. 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.
    4. 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).
    5. François Maréchal & Lionel Thomas, 2019. "The optimal payment system for hospitals under adverse selection, moral hazard, and limited liability," Working Papers 2019-04, CRESE.
    6. Elin Johanna Gudrun Hafsteinsdottir & Luigi Siciliani, 2010. "DRG prospective payment systems: refine or not refine?," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1226-1239, October.
    7. De Luca, Giacomo & Lisi, Domenico & Martorana, Marco & Siciliani, Luigi, 2021. "Does higher Institutional Quality improve the Appropriateness of Healthcare Provision?," Journal of Public Economics, Elsevier, vol. 194(C).
    8. Mathias Kifmann & Luigi Siciliani, 2017. "Average‐Cost Pricing and Dynamic Selection Incentives in the Hospital Sector," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 1566-1582, December.
    9. Beth Parkinson & Rachel Meacock & Matt Sutton, 2019. "How do hospitals respond to price changes in emergency departments?," Health Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 830-842, July.
    10. Kristensen, Søren Rud & Siciliani, Luigi & Sutton, Matt, 2016. "Optimal price-setting in pay for performance schemes in health care," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 57-77.
    11. Siciliani, Luigi, 2006. "Selection of treatment under prospective payment systems in the hospital sector," Journal of Health Economics, Elsevier, vol. 25(3), pages 479-499, May.
    12. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2018. "Can Competition Reduce Quality?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 174(3), pages 421-447, September.
    13. Tsuyoshi Takahara, 2016. "Patient dumping, outlier payments, and optimal healthcare payment policy under asymmetric information," Health Economics Review, Springer, vol. 6(1), pages 1-11, December.
    14. Gaughan, James & Gutacker, Nils & Grašič, Katja & Kreif, Noemi & Siciliani, Luigi & Street, Andrew, 2019. "Paying for efficiency: Incentivising same-day discharges in the English NHS," Journal of Health Economics, Elsevier, vol. 68(C).
    15. Domenico Lisi & Luigi Siciliani & Odd Rune Straume, 2020. "Hospital competition under pay‐for‐performance: Quality, mortality, and readmissions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 289-314, April.
    16. Kjartan Sarheim Anthun & Johan Håkon Bjørngaard & Jon Magnussen, 2017. "Economic incentives and diagnostic coding in a public health care system," International Journal of Health Economics and Management, Springer, vol. 17(1), pages 83-101, March.
    17. Olivella, Pau & Siciliani, Luigi, 2017. "Reputational concerns with altruistic providers," Journal of Health Economics, Elsevier, vol. 55(C), pages 1-13.
    18. Oddvar Kaarboe & Luigi Siciliani, 2011. "Multi‐tasking, quality and pay for performance," Health Economics, John Wiley & Sons, Ltd., vol. 20(2), pages 225-238, February.
    19. Siciliani, Luigi & Stanciole, Anderson & Jacobs, Rowena, 2009. "Do waiting times reduce hospital costs?," Journal of Health Economics, Elsevier, vol. 28(4), pages 771-780, July.
    20. Li‐Lin Liang, 2015. "Do Diagnosis‐Related Group‐Based Payments Incentivise Hospitals to Adjust Output Mix?," Health Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 454-469, April.

    More about this item

    Keywords

    Hospital stays; Diagnosis-related groups (DRGs); Upcoding; manipulated database; heterogeneity in responses;
    All these keywords.

    JEL classification:

    • 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:hal:wpaper:halshs-02317416. 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: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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 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.

    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.