Separating the True Effect from Gaming in Incentive-Based Contracts in Health Care
AbstractThis paper studies the effect of incentive regulation on health care. In the context of incentive-based health contracts, which might also introduce an incentive for the providers simply to report better treatment outcomes, evaluation of treatment using the information supplied by the providers (reported output) could be problematic. The systematic error on the output report is called providers' gaming behavior. This paper develops a general method for decomposing the effect of incentive-based contracts on performance into the true effect, which is the result of clinicians' improved effort induced by the contract, and the gaming effect, which is due to the change in the providers' reporting practice. The method follows the essence of linear structural relation (LISREL) models, and the true treatment output is modeled using a latent variable. Various output measures can be included in the structural evaluation model, but objective measure(s) (output measures not affected by providers' potential gaming) must be constructed based on available information to identify gaming through its correlation with the reported measures. The strengths of this method are that information from more than one output measure can be used, no monitoring system is required, and the construction of a gold-standard measure is not necessary. This method is applied to evaluate the impact of Maine's performance-based contracting on its public providers' substance-abuse services. Evidence of gaming is found in Maine's system, which remains robust in most of the sensitivity analyses. The methodology developed here can be used to evaluate the impact of a broad range of incentive-based contracts. Copyright (c) 1999 Massachusetts Institute of Technology.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.
Volume (Year): 8 (1999)
Issue (Month): 3 (09)
Contact details of provider:
Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Karen Eggleston & Randall P. Ellis & Mingshan Lu, 2007. "Prevention and Dynamic Risk Adjustment," Boston University - Department of Economics - Working Papers Series WP2007-023, Boston University - Department of Economics.
- Hsien-Ming Lien & Mingshan Lu & Ching-To Albert Ma & Thomas G. McGuire, 2006.
"Progress and Compliance in Alcohol Abuse Treatment,"
Boston University - Department of Economics - Working Papers Series
WP2006-043, Boston University - Department of Economics.
- Lien, Hsien-Ming & Lu, Mingshan & Albert Ma, Ching-To & McGuire, Thomas G., 2010. "Progress and compliance in alcohol abuse treatment," Journal of Health Economics, Elsevier, vol. 29(2), pages 213-225, March.
- Daniel A. Ackerberg & Matilde P. Machado & Michael H. Riordan, 2001.
"Measuring the Relative Performance of Providers of a Health Service,"
NBER Working Papers
8385, National Bureau of Economic Research, Inc.
- Daniel A. Ackerberg & Matilde P. Machado & Michael Riordan, 2002. "Measuring the relative performance of providers of a health service," Discussion Papers 0102-12, Columbia University, Department of Economics.
- Cavusoglu, Nevin, 2012. "LISREL growth model on direct and indirect effects using cross-country data," Economic Modelling, Elsevier, vol. 29(6), pages 2362-2370.
- Matilde P. Machado & Ricardo Mora & Antonio Romero-Medina, 2012.
"Can We Infer Hospital Quality From Medical Graduates’ Residency Choices?,"
Journal of the European Economic Association,
European Economic Association, vol. 10(6), pages 1400-1424, December.
- Machado, Matilde Pinto & Mora, Ricardo & Romero-Medina, Antonio, 2008. "Can We Measure Hospital Quality from Physicians' Choices?," CEPR Discussion Papers 6850, C.E.P.R. Discussion Papers.
- Fahad Khalil & Martin Chalkley, 2005.
"Third Party Purchasing of Health Services: Patient Choice and Agency,"
UWEC-2003-35-P, University of Washington, Department of Economics.
- Chalkley, Martin & Khalil, Fahad, 2005. "Third party purchasing of health services: Patient choice and agency," Journal of Health Economics, Elsevier, vol. 24(6), pages 1132-1153, November.
- Matilde P. Machado, 2003. "Substance Abuse Treatment: What Do We Know? An Economist’S Perspective," Economics Working Papers we035621, Universidad Carlos III, Departamento de Economía.
- Matilde P. Machado, & Ricardo Mora & Antonio Romero- Medina, 2006. "A Methodology To Measure Hospital Quality Using Physicians' Choices Over Training Vacancies," Economics Working Papers we060201, Universidad Carlos III, Departamento de Economía.
- Mingshan Lu & Ching-to Albert Ma & Lasheng Yuan, 2003.
"Risk selection and matching in performance-based contracting,"
John Wiley & Sons, Ltd., vol. 12(5), pages 339-354.
- Mingshan Lu & Ching-to Albert Ma & Lasheng Yuan, 2000. "Risk Selection and Matching in Performance-Based Contracting," Papers 0101, Boston University - Industry Studies Programme.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.