Dissertation Information for Gerald Francis KominskiNAME:
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SCHOOL: ADVISORS: COMMITTEE MEMBERS: MPACT Status: Incomplete - Not_Inspected Title: AN ANALYSIS OF THE ECONOMIC INCENTIVES OF CASE-MIX HOSPITAL REIMBURSEMENT Abstract: The federal government has recently adopted a prospective payment system for Medicare patients based on the Diagnosis-Related Group (DRG) patient-classification system. This study demonstrates that the economic incentives of case-mix hospital reimbursement programs such as the Medicare program can be separated into incentives that result from: (a) the patient-classification system used for measuring hospital output, (b) the method for calculating fixed payment rates for each hospital output, and (c) control over price increases. This study also describes three sources of bias in the method used by Medicare to calculate payment rates. The first source of bias (indexation bias) results from the use of labor-market indexes to adjust payment rates for differences in area wage rates. The second source of bias (hospital-weighting bias) results from the use of hospital-weighted rather than patient-weighted average costs to calculate payment rates. The third source of bias (omitted-variable bias) results from the omission of relevant variables. The empirical findings indicate that: (1) indexation bias produces small discrepancies between total payments and total costs that vary across patient categories and that range from -1.64% to +0.32% of total costs; (2) hospital-weighting bias produces a small net discrepancy between total payments and total costs that is constant across all patient categories and that equals +0.18% of total costs; and (3) mortality rates and outlier (i.e., long length of stay) rates are two sources of omitted-variable bias that have a highly significant effect upon hospital profits and losses. These findings suggest that the redistribution of revenue resulting from indexation bias and omitted-variable bias may adversely affect the equity of payments to some hospitals and may ultimately create barriers to access for some beneficiaries. |
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Students under Gerald Francis Kominski
ADVISEES:
- None
COMMITTEESHIPS:
- Edward Pai - University of California, Los Angeles (1998)


