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- Title
So Many Hospitals, So Little Information: How Hospital Value‐Based Purchasing Is a Game of Chance.
- Authors
Friedson, Andrew I.; Horrace, William C.; Marier, Allison F.
- Abstract
As part of the Patient Protection and Affordable Care Act, participating hospitals have part of their Medicare reimbursements withheld and then redistributed based on quality performance. The Hospital Value‐Based Purchasing reimbursement plan relies partly on ordinal rankings of hospitals to determine how money is distributed. We analyze the quality metric score distributions that underlie payment redistribution and show that there is not enough information to reliably differentiate hospitals from one another near the program point cutoffs, and conclude that a large part of the payment formula is driven by sampling variability rather than true quality information. An alternative plan for rewarding hospitals is developed.
- Subjects
PATIENT Protection &; Affordable Care Act; GAMBLING; RATINGS of hospitals; MEDICARE reimbursement
- Publication
Southern Economic Journal, 2019, Vol 86, Issue 2, p773
- ISSN
0038-4038
- Publication type
Article
- DOI
10.1002/soej.12375