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Measuring the State Dependence Effect in Hospital Payment Adjustment.
1School of Business, St. Bonaventure University, St. Bonaventure, NY 14778, USA.
International Journal of Environmental Research and Public Health
|November 11, 2022
Summary
Hospitals that earned rewards in the previous year are 34.1% more likely to receive rewards again under the Hospital Value-Based Purchasing (HVBP) program. This effect varies by hospital ownership, with voluntary nonprofit hospitals showing the strongest state dependence.
Area of Science:
- Health Services Research
- Health Economics
- Public Health Policy
Background:
- The Hospital Value-Based Purchasing (HVBP) program, part of the Affordable Care Act (ACA), adjusts Medicare payments based on hospital performance.
- Hospitals face financial penalties or rewards determined by their total performance scores within the HVBP program.
- Understanding the dynamics of these payment adjustments is crucial for hospital financial planning and quality improvement.
Purpose of the Study:
- To investigate the state dependence effect in hospital payment adjustments under the HVBP program.
- To analyze how previous year's performance influences a hospital's likelihood of receiving rewards in the current year.
- To examine variations in state dependence across different hospital ownership types and identify other influencing factors.
Main Methods:
- Application of state dependence theory to analyze hospital payment dynamics.
- Utilizing a dynamic random-effect probit model for statistical estimation.
- Analyzing factors such as hospital ownership, bed size, teaching status, and regional demographics.
Main Results:
- A significant state dependence effect of 0.341 was found, indicating previous reward recipients are 34.1% more likely to be rewarded again.
- State dependence varied by ownership: voluntary nonprofit (0.370), proprietary (middle), and government-owned (0.293) hospitals.
- Teaching hospitals with over 400 beds were less likely to be rewarded, while voluntary nonprofit hospitals and those in higher-income areas were more likely to receive rewards.
Conclusions:
- Past performance strongly influences future rewards in the HVBP program, highlighting a 'winner-take-more' dynamic.
- Hospital ownership is a key moderator of this state dependence effect.
- Factors like hospital size, teaching status, and socioeconomic context play a role in reward allocation, necessitating tailored strategies for different hospital types.
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