Moneyball in Medicare: New Insights
Discussant: Elena Prager
This paper updates the prior published study by using more recent data and exploring more carefully what the exact relationship is between the incentives and annual performance improvement. The prior study used a simple linear relationship to predict one-year improvement. Instead, the relationship might be non-linear, have lags, differ by hospital type, change over time, and spillover to other programs. This issue is not merely of academic interest. There are also important policy considerations. If this HVBP Program is to achieve its goals, it is important to know how hospitals respond, over what time period, and whether some hospitals respond more strongly. Understanding how hospitals respond to financial incentives is necessary to design program incentives that are effective.
This study builds on prior work to test the relationship between marginal financial incentives and year-to-year changes in specific measures for the HVBP program. We explore whether the relationship is linear or non-linear, has lags of up to three years, differs by for-profit status and integration status, and whether it has changed over the life of the program. Preliminary results show a strong nonlinear relationship that is stronger for for-profit hospitals but weakens over time.