Moneyball in Medicare
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.
This work was supported by the National Institute on Aging (P01-AG019783). Emmett Keeler and Elena Prager provided helpful conference discussions. We are grateful for comments by seminar participants at the London School of Economics, the University of Chicago, the University of Michigan, and ASHEcon. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Lena M. Chen
Lena Chen was supported by AHRQ K08HS020671 during a portion of the time when this manuscript was being prepared. She receives support from the Department of Health and
Human Services Office of the Assistant
Secretary for Planning and Evaluation
for her work there. These funding
sources had no role in the preparation,
review, or approval of the manuscript.
Edward C. Norton & Jun Li & Anup Das & Lena M. Chen, 2017. "Moneyball in Medicare," Journal of Health Economics, . citation courtesy of