Norton, Edward C. <br/><br/>
Moneyball in Medicare:  Heterogeneous Treatment Effects / 
Edward C. Norton, Emily J. Lawton, Jun Li. 
 - Cambridge, Mass.  National Bureau of Economic Research  2020. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w27948 .
 - Working Paper Series (National Bureau of Economic Research)  no. w27948. .
<br/><br/> October 2020. 
<br/><br/> One of the most important changes to the United States health care system over the last two decades is the emergence of pay-for-performance as a way to encourage hospitals and other providers to improve quality of care.  Unlike fee-for-service, these value-based purchasing programs measure aspects of quality and financially reward hospitals that are outstanding or at least improving in their care.  Prior research has shown that hospitals often improve more when the marginal financial incentives are larger.  However, the exact relationship between marginal financial incentives and year-over-year improvement in measures remains unclear.  In this study, we use national 20152018 data on approximately 2,700 hospitals to estimate how hospitals respond to pay-for-performance incentives in the Hospital Value-Based Purchasing (HVBP) Program.  We show that this relationship is non-linear, has strong serial correlation, is somewhat similar for safety-net hospitals as non-safety-net hospitals, and is proportional to the size of the Medicare patient population. 
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