Patient Versus Provider Incentives in Long Term Care

How do patient and provider incentives affect the provision of long-term care? Our analysis of 551 thousand 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, when facility capacity binds, nursing homes shorten Medicaid stays to admit more profitable out-of-pocket private payers. Third, providers react more elastically to financial incentives than patients. Thus, targeting provider incentives through alternative payment models, such as episode-based reimbursement, is more effective than increasing patient cost-sharing in facilitating transitions to community-based care and generating long-term care savings.

Hackmann, Martin , R. Pohl und Nicolas Ziebarth (2024), Patient Versus Provider Incentives in Long Term Care, American Economic Journal: Applied Economics 16(3) , 178-218