How Do Hospitals Respond to Payment Incentives?

69 Pages Posted: 5 Dec 2016 Last revised: 13 Jun 2022

See all articles by Gautam Gowrisankaran

Gautam Gowrisankaran

Columbia University; HEC Montreal; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Keith A. Joiner

University of Arizona - College of Medicine

Jianjing Lin

Tulane University

Date Written: December 2016

Abstract

A recent literature finds that hospitals “upcode” when doing so increases revenues, suggesting that incomplete information creates substantial distortions. However, reporting complete information is itself costly. We examine the impact of both revenues and coding costs on hospital billing practices for Medicare inpatients. Following the literature, we investigate the fraction of patients top coded as the revenues from top coding vary. We then examine how this fraction changes following Medicare reforms—which increased the requirements and complexity to justify top codes—interacted with hospital electronic medical record adoption—which may decrease coding costs. We find evidence that coding costs drive top coding behavior.

Suggested Citation

Gowrisankaran, Gautam and Joiner, Keith A. and Lin, Jianjing, How Do Hospitals Respond to Payment Incentives? (December 2016). NBER Working Paper No. w22873, Available at SSRN: https://ssrn.com/abstract=2880312

Gautam Gowrisankaran (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Keith A. Joiner

University of Arizona - College of Medicine ( email )

Department of History
Tucson, AZ 85721
United States

Jianjing Lin

Tulane University ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

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