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Effects of episode-based payment on health care spending and utilization : evidence from perinatal care in Arkansas

Author: Caitlin CarrollMichael ChernewA Mark FendrickJoe ThompsonSherri RoseAll authors
Publisher: Cambridge, Mass. : National Bureau of Economic Research, 2017.
Series: Working paper series (National Bureau of Economic Research), no. 23926.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
We study how physicians respond to financial incentives imposed by episode-based bundled payment (EBP), which encourages lower spending and improved quality for an entire episode of care. Specifically, we study the impact of the Arkansas Health Care Payment Improvement Initiative, a multi-payer program that requires providers in the state to enter into EBP arrangements for perinatal care. Because of its multi-payer  Read more...
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Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Caitlin Carroll; Michael Chernew; A Mark Fendrick; Joe Thompson; Sherri Rose; National Bureau of Economic Research,
OCLC Number: 1006749178
Notes: "October 2017"
Description: 1 online resource (45 pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 23926.
Responsibility: Caitlin Carroll, Michael Chernew, A. Mark Fendrick, Joe Thompson, Sherri Rose.

Abstract:

We study how physicians respond to financial incentives imposed by episode-based bundled payment (EBP), which encourages lower spending and improved quality for an entire episode of care. Specifically, we study the impact of the Arkansas Health Care Payment Improvement Initiative, a multi-payer program that requires providers in the state to enter into EBP arrangements for perinatal care. Because of its multi-payer nature and the requirement that providers participate, the program covers the vast majority of births in the state. Unlike fee-for-service reimbursement, EBP holds physicians responsible for all care within a discrete clinical episode, rewarding physicians not only for efficient use of their own services but also for efficient management of other health care inputs. In a difference-in-differences analysis of commercial claims, we find that perinatal spending decreased by 3.8% overall in Arkansas after the introduction of EBP, compared to surrounding states. We find that the decrease was driven by reduced spending on non-physician health care inputs, specifically the prices paid for inpatient facility care, and that our results are robust to a number of sensitivity and placebo tests. We additionally find that EBP was associated with a limited improvement in quality of care.

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