Effect of a law limiting upcoding on hospitals’ admissions: Evidence from Italy

Policy makers have made several attempts to limit hospitals upcoding. We investigate the impact on discharges with and without complications of a law introducing a minimum length of stay to discharges with complications. We implement a DID econometric model to assess the impact of the law and a logistic multilevel model to estimate whether hospitals reacted strategically to it by varying the patients’ length of stay. We show that the policy has been effective in limiting upcoding, since the number of discharges with complications is significantly lower in 2008. We also show that hospitals have reacted strategically to the law by modifying the distribution of discharges’ length of stay in DRGs with complications, in order to continue practicing upcoding. Furthermore, we provide evidence that upcoding is greater in private for–profit hospitals, that have been more affected by the law.