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A Comparison of Hospital Responses to Reimbursement Policies for Medicaid Psychiatric Patients

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  • Richard G. Frank
  • Judith R. Lave

Abstract

Hospital expenditures continue to increase at rates that are higher than that of GNP growth. Policymakers are experimenting with a number of reimbursement methods in an attempt to curtail the growth in hospital costs. This article empirically assesses the impact of various hospital reimbursement methods on the use of hospital services. We specified and estimated a model of hospital duration for Medicaid psychiatric patients. A new semiparametric approach to estimation was implemented for a large national sample of hospital discharges. The empirical findings show significant reductions in hospital duration are associated with per case prospective payment as compared with cost-based reimbursement.

Suggested Citation

  • Richard G. Frank & Judith R. Lave, 1989. "A Comparison of Hospital Responses to Reimbursement Policies for Medicaid Psychiatric Patients," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 588-600, Winter.
    • Handle: RePEc:rje:randje:v:20:y:1989:i:winter:p:588-600
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    Cited by:

    1. Rajiv Sharma & Miron Stano & Renu Gehring, 2008. "Short‐term fluctuations in hospital demand: implications for admission, discharge, and discriminatory behavior," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 586-606, June.
    2. Moreno-Serra, Rodrigo & Wagstaff, Adam, 2010. "System-wide impacts of hospital payment reforms: Evidence from Central and Eastern Europe and Central Asia," Journal of Health Economics, Elsevier, vol. 29(4), pages 585-602, July.
    3. Hamada, Hironori & Sekimoto, Miho & Imanaka, Yuichi, 2012. "Effects of the per diem prospective payment system with DRG-like grouping system (DPC/PDPS) on resource usage and healthcare quality in Japan," Health Policy, Elsevier, vol. 107(2), pages 194-201.
    4. Eunhae Shin, 2019. "Hospital responses to price shocks under the prospective payment system," Health Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 245-260, February.
    5. Theurl, Engelbert & Winner, Hannes, 2007. "The impact of hospital financing on the length of stay: Evidence from Austria," Health Policy, Elsevier, vol. 82(3), pages 375-389, August.
    6. Leonard, Kevin J. & Rauner, Marion S. & Schaffhauser-Linzatti, Michaela-Maria & Yap, Richard, 2003. "The effect of funding policy on day of week admissions and discharges in hospitals: the cases of Austria and Canada," Health Policy, Elsevier, vol. 63(3), pages 239-257, March.
    7. Galina Besstremyannaya, 2013. "Heterogeneous hospital response to a per diem prospective payment system," Working Papers w0193, Center for Economic and Financial Research (CEFIR).
    8. Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 169-209, Spring.
    9. Clara Pott & Tom Stargardt & Udo Schneider & Simon Frey, 2021. "Do discontinuities in marginal reimbursement affect inpatient psychiatric care in Germany?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(1), pages 101-114, February.
    10. Ellis, Randall P. & McGuire, Thomas G., 1996. "Hospital response to prospective payment: Moral hazard, selection, and practice-style effects," Journal of Health Economics, Elsevier, vol. 15(3), pages 257-277, June.
    11. Galina Besstremyannaya, 2013. "Heterogeneous hospital response to a per diem prospective payment system," Working Papers w0193, New Economic School (NES).
    12. Hanjo M. Koehler, 2006. "Yardstick Competition when Quality is Endogenous: The Case of Hospital Regulation," Working Papers 013, Bavarian Graduate Program in Economics (BGPE).
    13. Björn A. Kuchinke & Ansgar Wübker, 2009. "Defizite von öffentlichen Allgemeinkrankenhäusern in Deutschland: Empirische Befunde von 1998 bis 2004 und wirtschaftspolitische Implikationen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(3), pages 290-308, August.
    14. Li‐Lin Liang, 2015. "Do Diagnosis‐Related Group‐Based Payments Incentivise Hospitals to Adjust Output Mix?," Health Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 454-469, April.
    15. Parida Wubulihasimu & Werner Brouwer & Pieter van Baal, 2016. "The Impact of Hospital Payment Schemes on Healthcare and Mortality: Evidence from Hospital Payment Reforms in OECD Countries," Health Economics, John Wiley & Sons, Ltd., vol. 25(8), pages 1005-1019, August.
    16. Kesteloot, K. & Voet, N., 1998. "Incentives for cooperation in quality improvement among hospitals--the impact of the reimbursement system," Journal of Health Economics, Elsevier, vol. 17(6), pages 701-728, December.
    17. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
    18. Galina Besstremyannaya, 2016. "Differential Effects of Declining Rates in a Per Diem Payment System," Health Economics, John Wiley & Sons, Ltd., vol. 25(12), pages 1599-1618, December.
    19. James E. Prieger, "undated". "A Generalized Parametric Selection Model for Non-Normal Data," Department of Economics 00-09, California Davis - Department of Economics.
    20. Richard C. Lindrooth & Gloria J. Bazzoli & Jan Clement, 2007. "The Effect of Reimbursement on the Intensity of Hospital Services," Southern Economic Journal, John Wiley & Sons, vol. 73(3), pages 575-587, January.
    21. James E. Prieger, "undated". "A Generalized Parametric Selection Model for Non-Normal Data," Department of Economics 00-09, California Davis - Department of Economics.
    22. Mark Pletscher, 2016. "Marginal revenue and length of stay in inpatient psychiatry," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(7), pages 897-910, September.
    23. Mingshan Lu & Ching‐to Albert Ma & Lasheng Yuan, 2003. "Risk selection and matching in performance‐based contracting," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 339-354, May.
    24. Glazer, Jacob & McGuire, Thomas G, 1994. "Payer Competition and Cost Shifting in Health Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 71-92, Spring.

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