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Supply-side risk adjustment and outlier payment policy

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  • Mougeot, Michel
  • Naegelen, Florence

Abstract

In most health care systems where a prospective payment system is implemented, an outlier payment is used to cover the hospitals' unusually high costs. When the hospital chooses its cost reduction effort before observing a patient's severity, we show that the best outlier payment is based on the realized cost when the hospital exerts the first best level of effort, for any level of severity.

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  • Mougeot, Michel & Naegelen, Florence, 2008. "Supply-side risk adjustment and outlier payment policy," Journal of Health Economics, Elsevier, vol. 27(5), pages 1196-1200, September.
    • Handle: RePEc:eee:jhecon:v:27:y:2008:i:5:p:1196-1200
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    Cited by:

    1. Carine Milcent, 2021. "From downcoding to upcoding: DRG based payment in hospitals," International Journal of Health Economics and Management, Springer, vol. 21(1), pages 1-26, March.
    2. Clark, Andrew E. & Milcent, Carine, 2018. "Ownership and hospital behaviour: Employment and local unemployment," Social Science & Medicine, Elsevier, vol. 202(C), pages 151-161.
    3. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2018. "Can Competition Reduce Quality?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 174(3), pages 421-447, September.
    4. François Maréchal & Lionel Thomas, 2019. "The optimal payment system for hospitals under adverse selection, moral hazard, and limited liability," Working Papers 2019-04, CRESE.
    5. Andrew E. Clark & Carine Milcent, 2015. "Hospital Employment and Local Unemployment: Evidence from French Health Reforms," Working Papers halshs-01183454, HAL.
    6. Carine Milcent, 2016. "Upcoding and heterogeneity in hospitals’ response: A Natural Experiment," PSE Working Papers halshs-01340557, HAL.
    7. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," Working Papers halshs-02317416, HAL.
    8. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," PSE Working Papers halshs-02317416, HAL.
    9. Tsuyoshi Takahara, 2016. "Patient dumping, outlier payments, and optimal healthcare payment policy under asymmetric information," Health Economics Review, Springer, vol. 6(1), pages 1-11, December.
    10. François Maréchal & Lionel Thomas, 2021. "The impact of medical complications on optimal hospital payment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1144-1173, December.

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