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Incentive Design and Quality Improvements: Evidence from State Medicaid Nursing Home Pay-for-Performance Programs

R. Tamara Konetzka, Meghan M. Skira and Rachel M. Werner
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R. Tamara Konetzka: Department of Public Health Sciences, University of Chicago
Meghan M. Skira: Department of Economics, University of Georgia Author email: skira@uga.edu
Rachel M. Werner: Division of General Internal Medicine, University of Pennsylvania; Center for Health Equity Research and Promotion, Crescenz VA Medical Center

American Journal of Health Economics, 2018, vol. 4, issue 1, 105-130

Abstract: Pay-for-performance (P4P) programs have become a popular policy tool aimed at improving health-care quality. We analyze how incentive design affects quality improvements in the nursing home setting, where several state Medicaid agencies have implemented P4P programs that vary in incentive structure. Using the Minimum Data Set and the Online Survey, Certification, and Reporting data from 2001 to 2009, we examine how the weights put on various performance measures that are tied to P4P bonuses, such as clinical outcomes, inspection deficiencies, and staffing levels, affect improvements in those measures. We find larger weights on clinical outcomes often lead to larger improvements, but small weights can lead to no improvement or worsening of some clinical outcomes. We find a qualifier for P4P eligibility based on having few or no severe inspection deficiencies is more effective at decreasing inspection deficiencies than using weights, suggesting simple rules for participation may incent larger improvement.

Keywords: pay-for-performance; nursing home quality; long-term care; incentive design (search for similar items in EconPapers)
JEL-codes: I11 I18 (search for similar items in EconPapers)
Date: 2018
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