The Impact of Hospital Pay-for-Performance on Hospital and Medicare Costs

HSR.org: 12/1/12

Objective: To evaluate the effects of Medicare’s hospital pay-for-performance demonstration project on hospital revenues, costs, and margins and on Medicare costs.

Data Sources/Study Setting: All health care utilization for Medicare beneficiaries hospitalized for acute myocardial infarction (AMI; ICD-9-CM code 410.x1) in fiscal years 2002–2005 from Medicare claims, containing 420,211 admissions with AMI.

Study Design: We test for changes in hospital costs and revenues and Medicare payments among 260 hospitals participating in the Medicare hospital pay-for-performance demonstration project and a group of 780 propensity-score-matched comparison hospitals. Effects were estimated using a difference-in-difference model with hospital fixed effects, testing for changes in costs among pay-for-performance hospitals above and beyond changes in comparison hospitals.

Principal Findings: We found no significant effect of pay-for-performance on hospital financials (revenues, costs, and margins) or Medicare payments (index hospitalization and 1 year after admission) for AMI patients. Read more