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Category Archives: H51

Assessing the Impacts of an Aging Population on Rising Healthcare and Pharmaceutical Expenditures within the United States

By Rahul Sharma 

This paper studies the impact of aging on rising healthcare and pharmaceutical expenditures in the United States with the goal of contextualizing the future burden of public health insurance on the government. Precedent literature has focused on international panels of multiple countries and hasn’t identified significant correlation between age and healthcare expenditures. This paper presents a novel approach of identifying this correlation by using a US sample population to determine if age impacts an individual’s consumption of healthcare services and goods. Results suggest that age has a significant impact on healthcare and pharmaceutical expenditures across private and public insurance.

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Advisors: Gilliam D. Saunders-Schmidler and Grace Kim | JEL Codes: H51, H53, I12, I13, I18, I38

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”

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