Hospital Medicare Spending per Beneficiary: A Longitudinal Study

Area of Science:

• Health Services Research
• Health Economics
• Hospital Management

Background:

• Limited research exists on the financial impact of pay-for-performance (PFP) initiatives, specifically the Efficiency and Cost Reduction domain of the Centers for Medicare & Medicaid Services' (CMS) Hospital Value-Based Purchasing (HVBP) Program.
• Understanding the relationship between hospital cost inefficiency and HVBP program performance is crucial for optimizing healthcare spending.

Purpose of the Study:

• To examine the association between hospital cost inefficiency and participation in the HVBP Program.
• To estimate the probability and magnitude of improvement or achievement in the HVBP Program's Efficiency and Cost Reduction domain.

Main Methods:

• Utilized 2014-2019 Efficiency and Cost Reduction domain data from CMS, merged with the American Hospital Association's Annual Survey Database.
• Employed zero-inflated negative binomial regression to analyze the data, accounting for excessive zero values.

Main Results:

• Hospital ownership, location, size, safety-net status, Medicare patient percentage, and nurses per bed were significant factors influencing efficiency.
• The Herfindahl-Hirschman Index and teaching status also demonstrated a significant impact on efficiency performance in the HVBP Program.

Conclusions:

• Hospital performance in the Efficiency and Cost Reduction domain has evolved, with inherent organizational structures potentially disadvantaging certain hospitals.
• The current HVBP Program may lack clear direction or actionable incentives for all stakeholders, particularly concerning Medicare spending per beneficiary.
• Findings offer practical value for policymakers, administrators, and researchers to refine PFP programs, improve resource allocation, and enhance healthcare system efficiency.