Moneyball in Medicare

Edward C. Norton, Jun Li, Anup Das, Lena M. Chen

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


US policymakers place high priority on tying Medicare payments to the value of care delivered. A critical part of this effort is the Hospital Value-based Purchasing Program (HVBP), which rewards or penalizes hospitals based on their quality and episode-based costs of care and incentivizes integration between hospitals and post-acute care providers. Within HVBP, each patient affects hospital performance on a variety of quality and spending measures, and performance translates directly to changes in program points and ultimately dollars. In short, hospital revenue from a patient consists not only of the DRG payment, but also of that patient's marginal future reimbursement. We estimate the magnitude of the marginal future reimbursement for individual patients across each type of quality and performance measure. We describe how those incentives differ across hospitals, including integrated and safety-net hospitals. We find evidence that hospitals improved their performance over time in the areas where they have the highest marginal incentives to improve care, and that integrated hospitals responded more than non-integrated hospitals.

Original languageEnglish (US)
Pages (from-to)259-273
Number of pages15
JournalJournal of Health Economics
StatePublished - Sep 2018
Externally publishedYes


  • Incentives
  • Integrated care
  • Medicare
  • Pay-for-performance
  • Value-based purchasing

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health


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