Pay-for-Performance and Selective Referral in Long-Term Care

44 Pages Posted: 22 May 2017

See all articles by Toshiaki Iizuka

Toshiaki Iizuka

University of Tokyo

Haruko Noguchi

National Institute of Population & Social Security Research

Shinya Sugawara

Tokyo University of Science

Date Written: May 2, 2017

Abstract

We examine how pay-for-performance (P4P) affects long-term care (LTC), exploiting a natural experiment in Japan. Matched user/care manager/provider data are used to observe care managers’ referral decisions. Care managers/providers can vertically integrate, and P4P creates new incentives for selective referrals. Overall, we found no robust evidence that P4P improves LTC outcomes. However, after P4P, LTC outcomes improved more when care managers referred users to affiliated providers than to non-affiliated providers. Moreover, care managers referred users whose care levels were more likely to improve to affiliated providers. Selective referrals are apparently explained by vertical integration and a lack of risk adjustment.

Keywords: Pay-for-performance; Long-term Care; Vertical Integration; Selective Referral; Difference-in-differences; Japanese Long-Term Care Insurance

JEL Classification: I11, I18, J14, J33

Suggested Citation

Iizuka, Toshiaki and Noguchi, Haruko and Sugawara, Shinya, Pay-for-Performance and Selective Referral in Long-Term Care (May 2, 2017). Available at SSRN: https://ssrn.com/abstract=2971560 or http://dx.doi.org/10.2139/ssrn.2971560

Toshiaki Iizuka

University of Tokyo ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan

Haruko Noguchi

National Institute of Population & Social Security Research ( email )

Hibiya Kokusai Building 6th Fl
2-2-3 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Chiyoda-ku
Japan
+81-3-3595-2989 (Phone)
+81-3-3595-2989 (Fax)

Shinya Sugawara (Contact Author)

Tokyo University of Science ( email )

6-3-1 NiiJuku Katsushika-Ku
Tokyo, 125-8585
Japan

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