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Category Archives: H50

Medicare’s Prospective Payment System: Do Differences in the Reimbursement Rate Affect Quantity of Care Delivered and Hospital Billing Practices?

By Russell Hollis

When the government changes Medicare policy, payment structures often accommodate the change through lowering reimbursement rates. Changes in reimbursements raise the question of what effect changes have on patient care. Using data sets from the Center for Medicare and Medicaid Services, I examine the diagnosis of major replacement or reattachment of the lower extremity and how the length of stay for patients responds to changing reimbursement rates. I extend my investigation of price incentives to monitor fraudulent coding by hospitals. In a sample of over 470,000 patients in 2,696 hospitals for fiscal year 2012, I find that a 1% increase in reimbursement leads to a .007% increase in length of stay for DRG 470 (without complications) patients and a .057% percent increase for DRG 469 (with complications) patients. I then find that a 10% decrease in reimbursement for DRG 470 or one percent increase for DRG 469 leads to a .0011 increase in fraction of DRG 469 patients in a particular hospital. Lastly, I comment on these results, which point to the evidence of price incentives in quantity of care an the possibility of “upcoding”1.

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Advisor: Allan Collard-Wexler | JEL Codes: H50, H51, I11, I13, I18 | Tagged: Diagnosis Related Group, Length of Stay, Medicare, Reimbursement, “Upcoding”

Federal Outlays: The Effect of the President and Electoral Politics

By Michael Ge

The effect of congressional electoral politics on pork barrel spending is a well -studied phenomenon.
Likewise, presidential politics are receiving increased scrutiny. This paper aims to expand the
literature relating presidential electoral politics and the geographic distribution of federal funds on a
county level. It asks whether there is increased spending in the electorally-important counties in the
electorally-important states during and after a presidential elections. Results show that there are in
fact links between electoral importance and federal funding levels. However, results do not show a
trend in those results over different elections.

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Advisor: Marjorie McElroy | JEL Codes: A12, D72, E62, H50, H61 | Tagged: Distributive Politics, Pork Barrel, Presidential Elections, US Federal Budget

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