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The Effect Of Public Policy On Health Service Providers, Marier Allison

Economics - Dissertations

Chapter 1

Low-income, publicly insured admissions historically cost more to treat than the average patient. To ensure that hospitals are reimbursed an adequate amount for care of indigent populations, Medicare reimburses hospitals an additional percentage amount according to federally set financial schedule. The reimbursement cutoff is discrete: at fifteen percent of a disproportionate patient percentage, a hospital is reimbursed an extra 2.5 percent of the standard prospective payment rate. I extend a simple model of hospital quality as a function of insurance reimbursement increases to determine that under certain circumstances there exists a positive relationship between quality and reimbursement. I …