Medicare reimbursement, nurse staffing, and patient outcomes

There is widespread concern about the quality of health care in the US, and the effect of provider payments on the quality of care is an important and unsettled issue in this debate. The critical question is whether changes in provider payments affect health. To date there is relatively little research on this question. Here, we present evidence of the effect of plausibly exogenous changes in Medicare reimbursement--caused by geographical reclassification--on hospital staffing (nurses) and patient outcomes. We find that changes in Medicare reimbursement levels of approximately 10% have no meaningful effect on hospital use of resources or patient outcomes.