Working Paper: NBER ID: w25178
Authors: Martin B. Hackmann; R. Vincent Pohl; Nicolas R. Ziebarth
Abstract: How do patient and provider incentives affect the provision of long-term care? Our analysis of 551 thousand nursing home stays yields three main insights. First, Medicaid-covered residents prolong their stays instead of transitioning to community-based care due to limited cost-sharing. Second, when facility capacity binds, nursing homes shorten Medicaid stays to admit more profitable out-of-pocket private payers. Third, providers react more elastically to financial incentives than patients. Thus, targeting provider incentives through alternative payment models, such as episode-based reimbursement, is more effective than increasing patient cost-sharing in facilitating transitions to community-based care and generating long-term care savings.
Keywords: long-term care; Medicaid; provider incentives; patient incentives; health care economics
JEL Codes: H51; H75; I11; I13; I18; J14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increasing patient cost-sharing (H51) | Medicaid stays (I18) |
| targeting provider incentives (J33) | lengths of stay (C41) |
| Medicaid transition (I18) | changes in out-of-pocket costs for patients (G52) |
| Medicaid transition (I18) | changes in reimbursement rates for providers (I18) |
| changes in out-of-pocket costs for patients (G52) | length of stay for Medicaid-covered residents (I18) |
| length of stay for Medicaid-covered residents (I18) | home discharge rate for Medicaid patients (I18) |
| nursing home capacity constraints (J14) | discharge rates of Medicaid patients (I18) |
| provider financial incentives (I13) | discharge rates of Medicaid patients (I18) |
| patient financial incentives (H51) | length of stay for Medicaid-covered residents (I18) |
| provider financial incentives (I13) | length of stay for Medicaid-covered residents (I18) |