Pay-for-Performance, Hospital Value Based Purchasing, Hospital Quality Scores, Ordinal Ranking, Indistinguishability, Reimbursement
Economics | Health Policy | Medicine and Health | Public Affairs, Public Policy and Public Administration
As part of the Patient Protection and Affordable Care Act, participating Medicare 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 distributions used for payment and show that there is not enough information to reliably differentiate hospitals from one another near the payment cutoffs; and conclude that a large part of the payment formula is driven by sampling variability rather than true quality information. Alternative reimbursement plans are developed.
Friedson, Andrew I.; Horrace, William C.; and Marier, Allison F., "So Many Hospitals, So Little Information: How Hospital Value Based Purchasing is a Game of Chance" (2018). Center for Policy Research. 225.
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