Upcoding and heterogeneity in hospitals’ response: A Natural Experiment

Carine Milcent

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Abstract: How has this administrative change affcted the healthcare providers behaviour? Using a unique longitudinal database with 145 million stays, I study the dependence of the severity classification associated with hospital stays on a financial incentive, as well as the resulting budgetary reallocations. The classification of diagnosis-related groups (DRGs) in France changed in 2009. The number of groups was multiplied by 4. Controlling for pathology indicators and hospital fixed e↵ects, I unambiguously demonstrate that a finer classification led to an "upcoding" of stays. Because of a fixed annual budget at the national level, these results directly imply that the upcoding led to a budget reallocation which increased the share of health spending that went to for-profit hospitals, at the expense of public nonresearch hospitals. This budget reallocation did not correspond to any change in the actual production of care.

Keywords: Hospital stays; Diagnosis-related groups (DRGs); Upcoding; heterogeneity in responses (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-eur and nep-hea
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Working Paper: Upcoding and heterogeneity in hospitals’ response: A Natural Experiment (2016)
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