Payment & Delivery

How insurers and providers are organized and paid to deliver care. Research by LDI Senior Fellows examines the shift from fee-for-service payments to newer models of paying for and delivering value, such as Accountable Care Organizations and Patient-Centered Medical Homes.

Economic Implications Of Chinese Diagnosis-Related Group–Based Payment Systems For Critically Ill Patients In ICUs

Jul. 1, 2020

Zhaolin Meng, Yanan Ma, Suhang Song, Ye Li, Dan Wang, Yafei Si, Ruochen Sun, Ruochen Zhang, Hao Xue, Limei Jing, Huazhang Wu

Abstract [from journal]

Objectives: To evaluate the economic implications of payments based on Chinese diagnosis-related groups for critically ill patients in ICUs in terms of total hospital expenditure, out-of-pocket payments, and length of stay.

Design: A pre-post comparison of patient cohorts admitted to ICUs 1 year before and 1 year after Chinese diagnosis-related group reform was undertaken. Demographic characteristics, clinical data, and


The Income-Based Mortality Gradient Among US Health Care Workers: Cohort Study

Jun. 30, 2020

Sasmira Matta, Paula Chatterjee, Atheendar S. Venkataramani 

Abstract [from journal]

The health care industry is the largest employer in the USA. The health care workforce encompasses a range of occupations that vary widely by income, including home health aides, food service workers, clerical workers, nurses, physicians, and executives....

Payment and Pricing Decisions in Health Care Reform

Issue Brief
Jun. 23, 2020

Any effort to reform health insurance in the United States must tackle the prices we pay for health care. There are many complex challenges to addressing prices. Some proposals build on the existing Medicare fee schedule, while others suggest promoting alternative payment mechanisms—or even starting from scratch. The stakes are substantial, as many reform proposals rely on reining in prices to achieve the savings necessary to expand health insurance to the uninsured. At Penn’s LDI Medicare for All and Beyond conference, a panel of researchers, hospital administrators, and policy experts considered issues related to health care payment and pricing that any health care reform proposal must address, including the implications of rate setting for providers and patients. At what level should these rates be set to assure access and quality of care, while incentivizing innovation and rewarding excellence?

Association of State Medicaid Expansion With Hospital Community Benefit Spending

May. 29, 2020

Genevieve P. Kanter, Bardia Nabet, Meredith Matone, David M. Rubin

Abstract [from journal]

Importance: Medicaid expansion was widely expected to alleviate the financial stresses faced by hospitals by providing additional revenue in the form of Medicaid reimbursements from patients previously receiving uncompensated care. Among nonprofit hospitals, which receive tax-exempt status in part because of their provision of uncompensated care, Medicaid expansion could have released hospital funds toward other community benefit activities.

Objective: To examine changes in nonprofit hospital spending on...

Transforming Mental Health Care Through Implementation of Evidence-Based Practices

Issue Brief
May. 21, 2020

Changing clinical practice is hard, and changing practices within larger organizations is even harder. Increasingly, policymakers are looking to implementation science—the study of why some changes prove more durable than others—to understand the dynamics of successful transformation. In this brief, we summarize the results of an ongoing community-academic partnership to increase the uptake of evidence-based practices in Philadelphia’s public behavioral health care system. Over five years, researchers found that widescale initiatives did successfully change the way care was delivered, albeit modestly and slowly. The evidence suggests that organizational factors, such as a proficient work culture, are more important than individual therapist factors, like openness in change, in influencing successful practice change. While practice transformation is possible, it requires focusing on underlying problems within organizations as well as championing new policies. 

Surgical Care in Accountable Care Organizations

May. 12, 2020

Accountable care organizations (ACOs) figure prominently in Medicare’s shift “from volume to value.” Providers in ACOs assume financial accountability for overall quality and costs for a defined patient population, and they earn shared savings for containing spending below a defined benchmark. To date, most ACOs have focused on primary care, outpatient services, and care management for patients with chronic medical conditions, such as diabetes and heart failure.

Health Care Cost Drivers and Options for Control

Issue Brief
Apr. 28, 2020

The growth of health care costs remains a serious concern in the United States. Slowing this growth involves understanding what drives health care costs and how to target those drivers effectively. In this brief, we review the relative importance of different health care cost drivers, including insurance benefits design, price inflation, provider incentives, technological growth, and inefficient system performance. We analyze the impact of these factors on the growth of health care spending in the last decade, which has been concentrated in hospitals and felt most acutely in the private market.

Policy Options for Financing Long-Term Care in the U.S.

Issue Brief
Apr. 15, 2020

Unlike many other developed nations, the U.S. has no system that protects its residents against the high costs of long-term care, which many people will need as they age. Medicaid coverage kicks in only after families have exhausted their resources. Until then, families bear the financial and caregiving burden of LTC themselves. In the absence of a national system, several states have considered or passed programs that offer some support for LTC. Many peer nations have more comprehensive systems to spread the risk for LTC costs across their population, through social insurance or other mechanisms. This Issue Brief reviews international models of financing LTC, as well as recent state efforts, to help U.S. policymakers design a program that can meet the LTC challenges of an aging population.

Paying Twice for the Same Service for Veterans in Medicare Advantage Plans

Apr. 13, 2020

Over a four-year period, the federal government double-paid for the health care of 4,764 recipients of coronary revascularization procedures, leading to $214 million in redundant spending. This wasteful spending occurs due to policies governing the Medicare Advantage program for Veterans that do not reflect how the U.S. health care system is currently structured. We published these findings last week in JAMA Network Open.[content_elements:element:0]

Relative Contributions of Hospital Versus Skilled Nursing Facility Quality on Patient Outcomes

Mar. 30, 2020

Paula Chatterjee, Mingyu Qi, Rachel Werner

Abstract [from journal]

Background: Hospitals and health systems worldwide have adopted value-based payment to improve quality and reduce costs. In the USA, skilled nursing facilities (SNFs) are now financially penalised for higher-than-expected readmission rates. However, the extent to which SNFs contribute to, and should thus be held accountable for, readmission rates is unknown. To compare the relative contributions of hospital and SNF quality on readmission rates while controlling for unobserved patient characteristics.