Moneyball in Medicare: Heterogeneous Treatment Effects

Edward Norton, Emily J. Lawton and Jun Li

No 27948, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 2015 2018 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.

JEL-codes: I11 I18 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-hea and nep-ias
Note: EH
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Published as Edward C. Norton & Emily J. Lawton & Jun Li, 2023. "Moneyball in Medicare," American Journal of Health Economics, vol 9(1), pages 96-126.

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