Three Essays on Payment Incentive Design, Health Care Delivery, and Quality Performance
Creators: name: Lawton, Emily
Publisher: name: My University
Year: 2023
Subjects: subject: Incentives
subject: Pay-for-performance
subject: Health care reform
subject: Quality performance
subject: Health care delivery
subject: Unintended effects of health care policies
subject: Public Health
subject: Health Sciences

description: Pay-for-performance programs intend to improve care through financial incentives. My dissertation focuses on payment incentive design, health care delivery, and quality performance. Chapters 1-2 investigate the Hospital Readmissions Reduction Program (HRRP)’s intended and unintended ramifications. The HRRP aims to reduce readmissions through financial incentives. However, this well-intentioned policy has unintended consequences. The HRRP established different financial consequences for hospitals, depending on whether a patient was readmitted to the same (index) or to a different (non-index) hospital. Although readmissions to a non-index hospital rather than the index hospital have been pervasive, only index hospitals (as defined relative to the given patient) face any HRRP financial incentives to reduce readmissions. This increases risk of penalties and negative quality perceptions for only the index hospital — for readmission decisions outside their direct control. Consequently, non-index hospitals gain reimbursement for readmitting patients previously admitted elsewhere and avoid being penalized. This research is the first to exploit exogenous variation in hospital incentives to obtain causal estimates of the effects of the HRRP on patients, Medicare, and hospitals. There is variation in treatment of index versus non-index hospital visits from before to after the HRRP, along with variation in the magnitude of the hospital-specific marginal incentive. This research finds that providers are responsive to financial incentives underlying the specific HRRP design, responding more as incentives increase. Original admitting hospitals respond by decreasing the probability of patients returning to any hospital, as the hospital-specific marginal incentive increases. Hospitals to which beneficiaries return respond by differentially increasing care through the ED, reducing readmissions, and decreasing spending for index hospital visits (compared to non-index visits) post-HRRP, as the marginal incentive increases. This research sheds light on why overall readmission reductions have been less pronounced than expected, because readmissions at hospitals lacking financial incentives are common. These asymmetric incentives across hospitals influence revisits and readmissions, distort the signal of hospitals’ readmission rates, increase unnecessary spending, and affect disparities. Chapter 3 investigates whether changes in financial incentives to improve abdominal hysterectomy-based measure performance under the Hospital-Acquired Condition Reduction Program (HACRP) and the Hospital Value-Based Purchasing (HVBP) Program influence hysterectomy type as well as subsequent care and spending outcomes for patients. This research exploits variation in incentives from before to after HACRP and HVBP Program implementation and variation in the magnitude of the hospital-specific marginal incentive. Hysterectomies are the second most common surgical procedure for women. Compared with other types, abdominal hysterectomies have worse outcomes and higher spending. Beginning FY 2016, the HACRP and HVBP Program incorporated a surgical site infection following abdominal hysterectomy measure. Yet, because this is based only on abdominal hysterectomy performance, this changes the marginal incentives to select a given hysterectomy approach. This research finds that as providers face larger incentives to improve on the measure, the probability of performing an abdominal hysterectomy (rather than a non-included hysterectomy procedure) decreases. Moreover, as the marginal incentive increases, the probability of patients receiving subsequent hospital care or having post-procedural expenses, along with the average post-hysterectomy price-standardized spending, decreases. The results inform policies about hysterectomy performance, hospital practices, and policy design. Together, this can lead to critical improvements in recovery, safety, and spending for the numerous patients undergoing hysterectomies each year.