Does Health IT Adoption Lead to Better Information or Worse Incentives?

Gautam Gowrisankaran, Keith A. Joiner, Jianjing Lin

NBER Working Paper No. 22873
Issued in December 2016
NBER Program(s):Health Care, Industrial Organization

We evaluate whether hospital adoption of electronic medical records (EMRs) leads to increases in billing where financial gains are large or where hassle costs of complete coding are low. The 2007 Medicare payment reform varied both financial incentives and hassle costs of coding. We find no significant impact of financial incentives on billing levels, inconsistent with bill inflation. However, the reform led to increases in reported severity for medical relative to surgical patients at EMR hospitals, consistent with EMRs decreasing coding costs for medical patients. Greater post-reform completeness of coding with EMRs may increase Medicare costs by $689.6 million annually.

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Document Object Identifier (DOI): 10.3386/w22873

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