Regulated Revenues and Hospital Behavior: Evidence from a Medicare Overhaul

Tal Gross, Adam Sacarny, Maggie Shi and David Silver
Additional contact information
Maggie Shi: Columbia University
David Silver: Princeton University

Working Papers from Princeton University. Economics Department.

Abstract: We study a 2008 policy reform in which Medicare revised its hospital payment system to better reflect patients’ severity of illness. We construct a simulated instrument that predicts a hospital’s policy-induced change in reimbursement using pre-reform patients and post-reform rules. The reform led to large persistent changes in Medicare payment rates across hospitals. Hospitals that faced larger gains in Medicare reimbursement increased the volume of Medicare patients they treated. The estimates imply a volume elasticity of 1.2. To accommodate greater volume, hospitals increased nurse employment, but also lowered length of stay, with ambiguous effects on quality.

Keywords: Medicare; healthcare (search for similar items in EconPapers)
JEL-codes: I12 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-ias and nep-reg
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Regulated Revenues and Hospital Behavior: Evidence from a Medicare Overhaul (2024)
Working Paper: Regulated Revenues and Hospital Behavior: Evidence from a Medicare Overhaul (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2021-2

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