Moneyball in Medicare

47 Pages Posted: 27 Jun 2016

See all articles by Edward C. Norton

Edward C. Norton

University of Michigan at Ann Arbor

Jun Li

University of Michigan at Ann Arbor - Department of Health Management and Policy

Anup Das

Jawaharlal Nehru University

Lena Chen

University of Michigan at Ann Arbor

Date Written: June 2016

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

Norton, Edward C. and Li, Jun and Das, Anup and Chen, Lena, Moneyball in Medicare (June 2016). NBER Working Paper No. w22371. Available at SSRN: https://ssrn.com/abstract=2800880

Edward C. Norton (Contact Author)

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Jun Li

University of Michigan at Ann Arbor - Department of Health Management and Policy ( email )

109 Observatory
Ann Arbor, MI 48109-2029
United States

Anup Das

Jawaharlal Nehru University ( email )

School of Social Sciences-I
Jawaharlal Nehru University
New Delhi, Delhi 110067
India

HOME PAGE: http://www.anupkumardas.blogspot.in

Lena Chen

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

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