Article
| Management Science
|
Forthcoming
Evidence of Upcoding in Pay-for-Performance Programs
by
Hamsa Bastani, Joel Goh and Mohsen Bayati
|
Abstract
Recent Medicare legislation seeks to improve patient care quality by financially penalizing providers for hospital-acquired infections (HAIs). However, Medicare cannot directly monitor HAI rates and instead relies on providers accurately self-reporting HAIs in claims to correctly assess penalties. Consequently, the incentives for providers to improve service quality may disappear if providers upcode, i.e., misreport HAIs (possibly unintentionally) in a manner that increases reimbursement or avoids financial penalties. Identifying upcoding in claims data is challenging due to unobservable confounders (e.g., patient risk). We leverage state-level variations in adverse event reporting regulations and instrumental variables to discover contradictions in HAI and present-on-admission (POA) infection reporting rates that are strongly suggestive of upcoding. We conservatively estimate that 10,000 out of 60,000 annual reimbursed claims for POA infections (18.5%) were upcoded HAIs, costing Medicare $200 million. Our findings suggest that self-reported quality metrics are unreliable and thus, recent legislation may result in unintended consequences.
Keywords: Medical Coding;
Health Policy;
healthcare-acquired conditions;
Medicare;
Health Care and Treatment;
Policy;
Performance Improvement;
Quality;
Measurement and Metrics;
Government Legislation;