title: Incentivizing Cost-Effective Reductions in Hospital Readmission Rates.
abstract: The recent regulatory changes enacted by the Centers for Medicare and Medicaid Services (CMS) have identified hospital readmission rates as a critical healthcare quality metric. This research focuses on the utilization of pay-for-performance (P4P) mechanisms to cost effectively reduce hospital readmission rates and meet the regulatory standards set by CMS. Using the experimental economics laboratory we find that both of the P4P mechanisms researched, bonus and bundled payments, cost-effectively meet the performance criteria set forth by CMS. The bundled payment mechanism generates the largest reduction in patient length of stay (LOS) without altering the probability of readmission. Combined these results indicate that utilizing P4P mechanisms incentivizes cost effective reductions in hospital readmission rates.
authors.affiliation: Experimental Economics Center (ExCEN) and Department of Economics, Andrew Young School of Policy Studies, Georgia State University. Cox: 14 Marietta St. NW, Room 436; Atlanta GA 30303; jccox@gsu.edu ; 404-413-0200. Sadiraj: 14 Marietta St., NW, Room 453; Atlanta GA 30303; vsadiraj@gsu.edu ; 404-413-0193.
authors.forename: James C
authors.initials: JC
authors.lastname: Cox
authors.affiliation: Experimental Economics Center (ExCEN) and Department of Economics, Andrew Young School of Policy Studies, Georgia State University. Cox: 14 Marietta St. NW, Room 436; Atlanta GA 30303; jccox@gsu.edu ; 404-413-0200. Sadiraj: 14 Marietta St., NW, Room 453; Atlanta GA 30303; vsadiraj@gsu.edu ; 404-413-0193.
authors.forename: Vjollca
authors.initials: V
authors.lastname: Sadiraj
authors.affiliation: School of Social Sciences, Humanities and Arts, University of California, Merced; 5200 North Lake Road; Merced CA 95343; kschnier@ucmerced.edu ; 209-205-6461.
authors.forename: Kurt E
authors.initials: KE
authors.lastname: Schnier
authors.affiliation: Department of Surgery, Emory University School of Medicine; 201 Dowman Drive; Atlanta GA 30322; jfsween@emory.edu ; 404-727-5800.
authors.forename: John F
authors.initials: JF
authors.lastname: Sweeney
keywords: D81; Experiment JEL Codes: C91; Healthcare; I10; Pay-for-Performance (P4P)