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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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    2. Michel Mougeot & Florence Naegelen, 2009. "Adverse Selection, Moral Hazard, and Outlier Payment Policy," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 177-195, March.
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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, 2019. "From downcoding to upcoding: DRG based payment in hospitals," Working Papers halshs-02317416, HAL.
    7. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," PSE Working Papers halshs-02317416, HAL.
    8. Carine Milcent, 2016. "Upcoding and heterogeneity in hospitals’ response: A Natural Experiment," PSE Working Papers halshs-01340557, HAL.
    9. Tsuyoshi Takahara, 2013. "Patient Dumping, Outlier Payments, and Optimal Healthcare Payment Policy under Asymmetric Information," ISER Discussion Paper 0891r, Institute of Social and Economic Research, Osaka University, revised Oct 2014.
    10. 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.
    11. 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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