Effects of payment reform in more versus less competitive markets

Neeraj Sood, Abby Alpert, Kayleigh Barnes, Peter Huckfeldt, José J. Escarce

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

Policymakers are increasingly interested in reducing healthcare costs and inefficiencies through innovative payment strategies. These strategies may have heterogeneous impacts across geographic areas, potentially reducing or exacerbating geographic variation in healthcare spending. In this paper, we exploit a major payment reform for home health care to examine whether reductions in reimbursement lead to differential changes in treatment intensity and provider costs depending on the level of competition in a market. Using Medicare claims, we find that while providers in more competitive markets had higher average costs in the pre-reform period, these markets experienced larger proportional reductions in treatment intensity and costs after the reform relative to less competitive markets. This led to a convergence in spending across geographic areas. We find that much of the reduction in provider costs is driven by greater exit of “high-cost” providers in more competitive markets.

Original languageEnglish (US)
Pages (from-to)66-83
Number of pages18
JournalJournal of Health Economics
Volume51
DOIs
StatePublished - Jan 1 2017

Bibliographical note

Funding Information:
This research was supported by grants from AHRQ (R01HS018541) and NIA (R01AG046838)

Keywords

  • Competition
  • Geographic variation
  • Home health care
  • Medicare
  • Payment reform
  • Prospective payment

Fingerprint Dive into the research topics of 'Effects of payment reform in more versus less competitive markets'. Together they form a unique fingerprint.

Cite this