Title: Fees equalization and Appropriate Health Care

Fees equalization in health care brings under a unique tariff several medical treatments, coded under different Diagnosis Related Groups (DRGs). The aim is to improve healthcare quality and efficiency by discouraging unnecessary, but better-paid,treatments. We evaluate its effectiveness on childbirth procedures to reduce c-section overuse by equalizing the DRGs for vaginal and cesarean deliveries. Using Italian data and a difference-in-differences approach, we show that setting an equal reimbursement decreased c-sections by 2.5%. This improved the appropriateness of medical decisions with more low-risk mothers delivering naturally and no significant changes in the incidence of complications for vaginal deliveries. Our analysis supports the effectiveness of fees equalization in averting c-sections, but highlights the marginal role of financial incentives in driving c-section overuse which went back to normal in the short run. We found a stronger reduction in low-quality, and more capacity constrained hospitals. Moreover, the effect is driven by districts where the availability of Ob-Gyn specialists is higher and where women are predominant in the gender composition of the specialty group.