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Moneyball in Medicare

Author

Listed:
  • Edward C. Norton
  • Jun Li
  • Anup Das
  • Lena M. Chen

Abstract

US policymakers place a high priority on tying Medicare payments to the value of care delivered. A critical part of this effort is the Hospital Value-based Purchasing Program (HVBP), which rewards or penalizes hospitals based on their quality and episode-based costs of care. Within HVBP, each patient affects hospital performance on a variety of quality and spending measures, and performance translates directly to changes in program points and ultimately dollars. In short, hospital revenue from a patient consists not only of the DRG payment, but also consists of that patient’s marginal future reimbursement. We estimate the magnitude of the marginal future reimbursement for individual patients across each type of quality and performance measure. We describe how those incentives differ across hospitals, including integrated and safety-net hospitals. We find some evidence that hospitals improved their performance over time in the areas where they have the highest marginal incentives to improve care.

Suggested Citation

  • Edward C. Norton & Jun Li & Anup Das & Lena M. Chen, 2016. "Moneyball in Medicare," NBER Working Papers 22371, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22371
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    1. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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    Cited by:

    1. Emma McManus & Jack Elliott & Rachel Meacock & Paul Wilson & Judith Gellatly & Matt Sutton, 2021. "The effects of structure, process and outcome incentives on primary care referrals to a national prevention programme," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1393-1416, June.
    2. Cheatham, Leah P. & Randolph, Karen A. & Boltz, Laura D., 2020. "Youth with disabilities transitioning from foster care: Examining prevalence and predicting positive outcomes," Children and Youth Services Review, Elsevier, vol. 110(C).
    3. Cornell, Portia Y. & Grabowski, David C. & Norton, Edward C. & Rahman, Momotazur, 2019. "Do report cards predict future quality? The case of skilled nursing facilities," Journal of Health Economics, Elsevier, vol. 66(C), pages 208-221.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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