Payment levels and hospital response to prospective payment

Hodgkin, Dominic; McGuire, Thomas G.

doi:10.1016/0167-6296(94)90002-7

Cited by 118 publications

(107 citation statements)

References 17 publications

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“…These have included the Medicare hospital inpatient prospective payment system, 1 followed by the Medicare resource-based relative value scale for physicians; 2,3 the growth of capitation contracting with medical groups, integrated delivery systems, and pay for performance; [4][5][6] shared savings; 7 bundled payments; [8][9][10] and a risk-adjusted global payment. [11][12][13] Recently the focus has turned to improving value by enhancing quality, reducing costs, and matching payment innovations to the structure of the delivery system.…”

Section: Payment Reformmentioning

confidence: 99%

Emerging Lessons From Regional and State Innovation in Value‐Based Payment Reform: Balancing Collaboration and Disruptive Innovation

et al. 2014

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Policy Points:r Public and private purchasers must create a "burning bridge" of countervailing pressure that signals "no turning back" to fee-for-service in order to sustain the momentum for value-based payment.r Multi-stakeholder coalitions must establish a defined set of quality, outcomes, and cost performance measures and the interoperable information systems to support data collection and reporting of value-based payment schemes.r Anti-trust vigilance is necessary to find the "sweet spot" of competition and cooperation among health plans and health care providers.r Provider and health plan transparency of price and quality, supported by all-payer claims data, are critical in driving value-based payment innovation and cost constraint. Context:In recent decades, practitioners and policymakers have turned to value-based payment initiatives to help contain spending on health care and to improve the quality of care. The Robert Wood Johnson Foundation funded 7 grantees across the country to design and implement value-based, multistakeholder payment reform projects in 6 states and 3 regions of the United States. Methods:As the external evaluator of these projects, we reviewed documents, conducted Internet searches, interviewed key stakeholders, cross-validated The Milbank Quarterly, Vol. 92, No. 3, 2014 (pp. 568-623) Emerging Lessons From Innovation in Value-Based Payment Reform 569factual and narrative interpretation, and performed qualitative analyses to derive cross-site themes and implications for policy and practice. Findings:The nature of payment reform and its momentum closely reflects the environmental context of each project. Federal legislation such as the Patient Protection and Affordable Care Act and federal and state support for the development of the patient-centered medical home and accountable care organizations encourage value-based payment innovation, as do local market conditions for payers and providers that combine a history of collaboration with independent innovation and experimentation by individual organizations.Multistakeholder coalitions offer a useful facilitating structure for galvanizing payment reform. But to achieve the objectives of reduced cost and improved quality, multistakeholder payment innovation must overcome such barriers as incompatible information systems, the technical difficulties and transaction costs of altering existing billing and payment systems, competing stakeholder priorities, insufficient scale to bear population health risk, providers' limited experience with risk-bearing payment models, and the failure to align care delivery models with the form of payment. Conclusions:From the evidence adduced in this article, multistakeholder, value-based payment reform requires a trusted, widely respected "honest broker" that can convene and maintain the ongoing commitment of health plans, providers, and purchasers. Change management is complex and challenging, and coalition governance requires flexibility and stable leadership, as market conditions and stakeholder enga...

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Section: Payment Reformmentioning

confidence: 99%

Emerging Lessons From Regional and State Innovation in Value‐Based Payment Reform: Balancing Collaboration and Disruptive Innovation

et al. 2014

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“…This model, which is similar to Hodgkin and McGuire's (1994) model of a hospital's choice of treatment intensity, is used to distinguish between two types of payment effects-a ''payment level effect'' and a ''prospective payment effect''-and is employed as the basis for the empirical analysis that follows. The level of resources devoted to patient care, measured by costs per resident day (c), is assumed to be under the nursing facility's control, and can be thought of as reflecting the nurse staffing level or, more generally, as the quality of care.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

Medicare's Prospective Payment System for Skilled Nursing Facilities: Effects on Staffing and Quality of Care

White¹

2005

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In 1998, Medicare began phasing in a new prospective payment system (PPS) for skilled nursing facilities (SNFs). This paper measures facility-level changes in nurse staffing and quality at freestanding SNFs from 1997 (pre-PPS) to 2001 (post-PPS). Findings show a positive but small association between changes in payment levels and changes in nurse staffing. Among for-profits, the elimination of cost reimbursement is associated with a large drop in nurse staffing. Additionally, the elimination of cost reimbursement is associated with worsening in one of four measures of quality of care; however, the quality results are not statistically robust.

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“…What is less appreciated, however, is that when providers have to compete for patients, prospective payment systems also create a new distinction among patients: namely, one between profitable and unprofitable patients depending on their expected costs relative to the level of prospective reimbursement (Newhouse, 1989). Thus, when profit-maximizing hospitals under fixed-rate prospective reimbursement face a patient population of variable illness within a reimbursement category, they may have incentives to provide excessive levels of care for the less-ill, and/or to choose and advertise quality of care or amenities that differentially attract these profitable patients while avoiding unprofitable ones (Hornbrook and Rafferty, 1982;Ellis and McGuire, 1986;Dranove, 1987;Luft and Miller, 1988;Newhouse, 1989;Hodgkin and McGuire, 1994;Ellis, 1998). 4 When intensified competition decreases overall profit levels and increases the price-responsiveness of patient volume, such strategies may become matters of institutional survival.…”

Section: Systemsmentioning

confidence: 99%

Effects of Competition under Prospective Payment on Hospital Costs among High and Low Cost Admissions: Evidence from California, 1983 - 1993

Meltzer¹,

Chung²

2001

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Payment levels and hospital response to prospective payment

Cited by 118 publications

References 17 publications

Emerging Lessons From Regional and State Innovation in Value‐Based Payment Reform: Balancing Collaboration and Disruptive Innovation

Emerging Lessons From Regional and State Innovation in Value‐Based Payment Reform: Balancing Collaboration and Disruptive Innovation

Medicare's Prospective Payment System for Skilled Nursing Facilities: Effects on Staffing and Quality of Care

Effects of Competition under Prospective Payment on Hospital Costs among High and Low Cost Admissions: Evidence from California, 1983 - 1993

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