Hospital responses to price shocks under the prospective payment system.
Health Econ
; 28(2): 245-260, 2019 02.
Article
in En
| MEDLINE
| ID: mdl-30443962
ABSTRACT
Under the prospective payment system (PPS), hospitals receive a bundled payment for an entire episode of treatment based on diagnosis-related groups (DRG). Although there is ample evidence regarding the impact of the introduction of the PPS, there is little research on the effects of the ensuing changes in payment levels under the PPS. In 2005, the Medicare PPS changed its definition of payment areas from the Metropolitan Statistical Areas to the Core-Based Statistical Areas, generating substantial area-specific price shocks. Using these exogenous price variations, this study examines hospital responses to price changes under the PPS. The results demonstrate that, while the average payment amount significantly increases in the affected areas, no parallel trend is observed in admission volume, treatment intensity, and quality of services. Conversely, hospitals facing a price increase are more liable to the perverse incentives that the PPS is known to encourage, namely, selecting or shifting patients into higher-paying DRGs. These results suggest that paying a higher price for a given service may not induce hospitals to offer services of better quality, but can rather prompt even higher payments through other behavioral responses.
Key words
Full text:
1
Collection:
01-internacional
Database:
MEDLINE
Main subject:
Prospective Payment System
/
Hospital Costs
/
Hospitals
Type of study:
Health_economic_evaluation
/
Prognostic_studies
/
Risk_factors_studies
Limits:
Aged
/
Aged80
/
Female
/
Humans
/
Male
/
Middle aged
Country/Region as subject:
America do norte
Language:
En
Journal:
Health Econ
Journal subject:
SERVICOS DE SAUDE
Year:
2019
Type:
Article