Topic: Distributional Consequences of Diagnosis-based Payment Scheme with a Global Budget

Speaker：YI Junjian（the Chinese University of Hong Kong）

Time：June 16, 2021, Wednesday, 10:00-11:30am

Tencent Meeting：

https://meeting.tencent.com/s/yapFaH8y3U89

Meeting ID：503 327 013

Password：12321

This paper examines the distributional consequences of the diagnosis-based payment scheme with a global budget for hospitals. We explore a payment reform in the urban employee basic medical insurance system in China in 2016. In response to the payment reform from fee-for-service to diagnosis-based payment scheme with a global budget, hospitals raise revenue through multiple channels: Hospitals upcode admission cases within each diagnostic category, increase the shares of patients in categories with higher upcoding potential, and increase the total number of admissions. Under the global budget cap, hospitals’ heterogenous responses to the payment reform lead to increasing disparity in hospital payments and hospital revenue. Our decomposition analysis suggests that such increasing disparity is mainly driven by the heterogeneous upcoding behaviors across hospitals. Hospitals that are more experienced in diagnostic categories with higher upcoding potential, larger in size, and more exposed to the reform upcode cases more aggressively.