Home > modeling, news > How to build a model that will be gamed

How to build a model that will be gamed

November 30, 2012

I can’t help but think that the new Medicare readmissions penalty, as described by the New York Times, is going to lead to wide-spread gaming. It has all the elements of a perfect gaming storm. First of all, a clear economic incentive:

Medicare last month began levying financial penalties against 2,217 hospitals it says have had too many readmissions. Of those hospitals, 307 will receive the maximum punishment, a 1 percent reduction in Medicare’s regular payments for every patient over the next year, federal records show.

It also has the element of unfairness:

“Many of us have been working on this for other reasons than a penalty for many years, and we’ve found it’s very hard to move,” Dr. Lynch said. He said the penalties were unfair to hospitals with the double burden of caring for very sick and very poor patients.

“For us, it’s not a readmissions penalty,” he said. “It’s a mission penalty.”

And the smell of politics:

In some ways, the debate parallels the one on education — specifically, whether educators should be held accountable for lower rates of progress among children from poor families.

“Just blaming the patients or saying ‘it’s destiny’ or ‘we can’t do any better’ is a premature conclusion and is likely to be wrong,” said Dr. Harlan Krumholz, director of the Center for Outcomes Research and Evaluation at Yale-New Haven Hospital, which prepared the study for Medicare. “I’ve got to believe we can do much, much better.”

Oh wait, we already have weird side effects of the new rule:

With pressure to avert readmissions rising, some hospitals have been suspected of sending patients home within 24 hours, so they can bill for the services but not have the stay counted as an admission. But most hospitals are scrambling to reduce the number of repeat patients, with mixed success.

Note, the new policy is already a kind of reaction to gaming that’s already there, namely because of the stupid way Medicare decides how much to pay for treatment (emphasis mine):

Hospitals’ traditional reluctance to tackle readmissions is rooted in Medicare’s payment system. Medicare generally pays hospitals a set fee for a patient’s stay, so the shorter the visit, the more revenue a hospital can keep. Hospitals also get paid when patients return. Until the new penalties kicked in, hospitals had no incentive to make sure patients didn’t wind up coming back.

How about, instead of adding a weird rule that compromises people’s health and especially punishes poor sick people and the hospitals that treat them, we instead improve the original billing system? Otherwise we are certain to see all sorts of weird effects in the coming years with people being stealth readmitted under different names or something, or having to travel to different hospitals to be seen for their congestive heart failure.

Categories: modeling, news
  1. Josh
    November 30, 2012 at 10:21 am

    Part of what you are illustrating is how hard it is to come up with good rules.

    What you call a “stupid way” that Medicare pays “a set fee for a patient’s stay” is commonly viewed as an improvement over the previous “fee-for-service” model that encourages hospitals to keep patients as long as possible and do expensive tests and procedures because they got paid for each one.

    Trying to deal with the unfairness is not so easy either. To account for nuance such as whether this hospital is treating very sick patients, the rule needs to be more complicated, which introduces more opportunity for gaming.

    I don’t know enough about the field to know what is right. Even if the rule were written by well-intentioned people with no vested interests, it would be extremely difficult to write a rule that wouldn’t be gamed.

    A bigger problem is that the rules won’t necessarily be written by well-intentioned people with no vested interest. Unfortunately, that is also an extremely difficult problem to solve.


  2. TAO
    November 30, 2012 at 9:45 pm

    They are called “bounces.” That is, patients who are quickly readmitted are called bounces. As a salaried physician working at a hospital which receives 100% of its funding from the federal government, I am paid the same amount regardless of how much I actually “do.” Everyday, new admissions roll in. And unless I discharge people at the same rate, the service will balloon. This means more work for me. Thus, my motivation to discharge people is strong even beyond the well known risks of iatrogenesis which comes along with prolonged hospitalization. That being said, the only thing worse than having a busy service is having a bounce. The patients usually come back in sicker, meaning more work. The bounce does not count towards the cap on the service, which means more work. The bounce does not count towards the cap on that day’s admissions, which means more work. And every bounce that comes back within two weeks of discharge is peer-reviewed for the appropriateness of discharge. Sometimes, this means having to explain one’s actions to a grim-faced peer review committee. That also means more work and is unpleasant to boot. Bounce is the last thing I want to hear about in the mornings. If I ever forget that I don’t get paid more the more I do, a bounce serves as an effective reminder.

    If there is a way to game this system, I have yet to figure it out.


    • December 1, 2012 at 1:01 pm


      Just to be clear on my end, I’m extremely sympathetic to your situation. In fact I think it’s outrageous that you don’t get paid more for more work. I just think that, if we’re so smart, we should be able to come up with a better system than this, which deals with things reasonably and pays more for more intrinsic work. Adding penalties for bounces, which as you point out aren’t anything that anyone wants, is not solving the problem.



  3. TAO
    December 2, 2012 at 4:07 am

    I am trying to make two points. First, only a masochist can game the system I live in. Second, I am paid a lump sum to provide a service. This service is peer-reviewed by real people who tend to understand medicine, not an algorithm. Thus, a system does exist which cannot largely be gamed and is largely fair. One of the problems with healthcare reform (and education reform for that matter) is that we focus on outcomes rather than processes and the bigger picture. Outcomes are strictly speaking impossible to control, though the processes which affect outcomes can be, to some degree, managed. Reforming billing is a great idea, but it does not necessarily lead to better outcomes per se. Even if we were to have a crisp definition of high quality care (which we most assuredly do not), it should not be rewarded, it should be expected. Consider the converse (inverse?) of the reward for quality canard: Should we charge patients more if they receive quality care? Or should we charge those folks whom we left scalpel in a little less?


  1. No trackbacks yet.
Comments are closed.
%d bloggers like this: