Patient vs. Provider Incentives in Long Term Care

Hackmann, Martin B. and R. Vincent Pohl. 2018. “Patient vs. Provider Incentives in Long Term Care.” NBER Working Paper 25178.

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Abstract: How do patient and provider incentives affect mode and cost of long-term care? Our analysis of 1 million 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, nursing homes shorten Medicaid stays when capacity binds to admit more profitable out-of-pocket payers. Third, providers react more elastically to financial incentives than patients, so moving to episode-based provider reimbursement is more effective in shortening Medicaid stays than increasing resident cost-sharing. Moreover, we do not find evidence for health improvements due to longer stays for marginal Medicaid beneficiaries.

Media coverage: Bloomberg, Skilled Nursing News