American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
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