Impacts of Performance Pay for Hospitals: The Readmissions Reduction Program
American Economic Review
vol. 111,
no. 4, April 2021
(pp. 1241-83)
Abstract
US policy increasingly ties payments for providers to performance on quality measures, though little empirical evidence guides the design of such incentives. I deploy administrative data to study a large federal program that penalizes hospitals with high readmissions rates. Using policy-driven variation in the penalty incentive across hospitals for identification, I find that hospital responses to the penalty account for two-thirds of the observed decrease in readmissions over this period, as well as a decrease in heart attack mortality. Quality improvement accounts for about one-half of the decrease in readmissions; the remainder is explained by selective admission of returning patients.Citation
Gupta, Atul. 2021. "Impacts of Performance Pay for Hospitals: The Readmissions Reduction Program." American Economic Review, 111 (4): 1241-83. DOI: 10.1257/aer.20171825Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- H51 National Government Expenditures and Health
- I11 Analysis of Health Care Markets
- I12 Health Behavior
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health