Abstract

http://ssrn.com/abstract=2080501
 


 



On Hospice Operations Under Medicare Reimbursement Policies


Baris Ata


Northwestern University - Kellogg School of Management

Brad Killaly


Emory University - Goizueta Business School

Tava Olsen


University of Auckland

Rodney P. Parker


University of Chicago Booth School of Business

June 9, 2012

Management Science, Vol. 59, No. 5 (2013) pp. 1027-1044.

Abstract:     
This paper analyzes the United States Medicare hospice reimbursement policy. The existing policy consists of a daily payment for each patient under care with a global cap of revenues accrued during the Medicare year, which increases with each newly admitted patient. We investigate the hospice’s expected profit and provide reasons for a spate of recent provider bankruptcies related to the reimbursement policy; recommendations to alleviate these problems are given. We also analyze a hospice’s incentives for patient management, finding several unintended consequences of the Medicare reimbursement policy. Specifically, a hospice may seek short-lived patients (such as cancer patients) over patients with longer expected length-of-stay and the effort with which they seek-out, or recruit, such patients will vary during the year. Further, the effort they apply to actively discharge patients whose condition has stabilized may also depend on the time of year. These phenomena are unintended and undesirable but are a direct consequence of the Medicare reimbursement policy. We propose an alternative reimbursement policy which ameliorates these shortcomings.

Number of Pages in PDF File: 32

Keywords: healthcare, operations, hospices, Medicare, fluid model, optimization

JEL Classification: C61, H51, I18

Accepted Paper Series


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Date posted: July 6, 2012 ; Last revised: October 31, 2013

Suggested Citation

Ata, Baris and Killaly, Brad and Olsen, Tava and Parker, Rodney P., On Hospice Operations Under Medicare Reimbursement Policies (June 9, 2012). Management Science, Vol. 59, No. 5 (2013) pp. 1027-1044.. Available at SSRN: http://ssrn.com/abstract=2080501 or http://dx.doi.org/10.2139/ssrn.2080501

Contact Information

Baris Ata
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Brad Killaly
Emory University - Goizueta Business School ( email )
1300 Clifton Road
Atlanta, GA 30322-2722
United States
Tava Olsen
University of Auckland ( email )
Dept of Property, 12 Grafton Rd
The University of Auckland Business School
Auckland Central, 1010
New Zealand
Rodney P. Parker (Contact Author)
University of Chicago Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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