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The Impact of Hospital Pay‐for‐Performance on Hospital and Medicare Costs
Author(s) -
Kruse Gregory B.,
Polsky Daniel,
Stuart Elizabeth A.,
Werner Rachel M.
Publication year - 2012
Publication title -
health services research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.706
H-Index - 121
eISSN - 1475-6773
pISSN - 0017-9124
DOI - 10.1111/1475-6773.12003
Subject(s) - pay for performance , revenue , payment , medicine , health care , emergency medicine , acute care , actuarial science , medical emergency , business , finance , economics , economic growth
Objective To evaluate the effects of M edicare's hospital pay‐for‐performance demonstration project on hospital revenues, costs, and margins and on M edicare costs. Data Sources/Study Setting All health care utilization for M edicare beneficiaries hospitalized for acute myocardial infarction ( AMI ; ICD ‐9‐ CM code 410.x1) in fiscal years 2002–2005 from M edicare claims, containing 420,211 admissions with AMI . Study Design We test for changes in hospital costs and revenues and M edicare payments among 260 hospitals participating in the M edicare hospital pay‐for‐performance demonstration project and a group of 780 propensity‐score‐matched comparison hospitals. Effects were estimated using a difference‐in‐difference model with hospital fixed effects, testing for changes in costs among pay‐for‐performance hospitals above and beyond changes in comparison hospitals. Principal Findings We found no significant effect of pay‐for‐performance on hospital financials (revenues, costs, and margins) or M edicare payments (index hospitalization and 1 year after admission) for AMI patients. Conclusions Pay‐for‐performance in the CMS hospital demonstration project had minimal impact on hospital financials and M edicare payments to providers. As P4P extends to all hospitals under the A ffordable C are A ct, these results provide some estimates of the impact of P4P and emphasize our need for a better understanding of the financial implications of P4P on providers and payers if we want to create sustainable and effective programs to improve health care value.