Patient vs. Provider Incentives in Long Term Care

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Event Type: 
Seminar Series
Date and Time: 
Monday, October 15, 2018
2:00 pm – 3:30 pm

We study how patient and provider incentives affect the mode and cost of long-term
care. Our analysis of 1 million nursing home stays yields four main insights. First,
Medicaid-covered residents prolong their stays instead of transitioning to community-
based care due to limited cost-sharing. Second, nursing homes shorten Medicaid stays
when capacity binds to admit more profittable residents who pay out-of-pocket. Third,
longer stays for marginal Medicaid beneficiaries do not improve health outcomes on
average, pointing to annual overspending of $0.9bn. Fourth, transitioning from per-
diem to episode-based provider reimbursement is more effective than increasing resident
cost-sharing in shortening Medicaid stays.