Moneyball in Medicare: Heterogeneous Treatment Effects
One of the most important changes to the United States health care system over the last two decades is the emergence of pay-for-performance as a way to encourage hospitals and other providers to improve quality of care. Unlike fee-for-service, these value-based purchasing programs measure aspects of quality and financially reward hospitals that are outstanding or at least improving in their care. Prior research has shown that hospitals often improve more when the marginal financial incentives are larger. However, the exact relationship between marginal financial incentives and year-over-year improvement in measures remains unclear. In this study, we use national 20152018 data on approximately 2,700 hospitals to estimate how hospitals respond to pay-for-performance incentives in the Hospital Value-Based Purchasing (HVBP) Program. We show that this relationship is non-linear, has strong serial correlation, is somewhat similar for safety-net hospitals as non-safety-net hospitals, and is proportional to the size of the Medicare patient population.
This work was supported by the National Institute on Aging (P01-AG019783). No conflicts of interest or financial disclosures are reported by any authors. Elena Prager and Lina Maria Elleg�rd provided insightful conference discussions. We are grateful for comments by seminar participants at ASHEcon and the Nordic Health Economics Study Group (2019). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Edward C. Norton
No conflicts of interest or financial disclosures are reported by any authors.