American Economic Review Vol. 111 No. 4 2021
Impacts of Performance Pay for Hospitals: The Readmissions Reduction Program
Abstract
US policy increasingly ties payments for providers to performance on quality measures, though little empirical evidence guides the design of such incentives. I deploy administrative data to study a large federal program that penalizes hospitals with high readmissions rates. Using policy-driven variation in the penalty incentive across hospitals for identification, I find that hospital responses to the penalty account for two-thirds of the observed decrease in readmissions over this period, as well as a decrease in heart attack mortality. Quality improvement accounts for about one-half of the decrease in readmissions; the remainder is explained by selective admission of returning patients.
- DOI
- 10.1257/aer.20171825
- Volume
- 111
- Issue
- 4
- Pages
- 1241-1283
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref