Risk sharing and moral hazard under prospective payment to hospitals: how to reimburse services for outlier patients

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Risk sharing and moral hazard under prospective payment to hospitals: how to reimburse services for outlier patients

Author Info

François MARECHAL
Michel MOUGEOT

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Michel Mougeot

Abstract

We analyze the regulation of a single health care provider (e.g. a hospital). According to several payment rules used in different countries, we consider a mixed linear payment in which the hospital is paid a fixed price per DRG (diagnosis related group) for most patients (inlier patients) and is reimbursed by a cost sharing payment for patients with exceptionally costly stays (outlier patients). Given this form of payment, we determine the optimal threshold above which to consider a patient as an outlier patient, as well as the optimal payment per DRG and the optimal cost sharing parameter. For the case where the regulator can use a two part tariff, we also determine the fixed charge the regulator has to impose in order to extract hospital rents.

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Publisher Info
Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 04.03.

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Length: 21 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:lau:crdeep:04.03

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Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
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Fax: ++41 21 692.33.65
Web page: http://www.hec.unil.ch/deep/publications-english/e-cahiers.htm

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Find related papers by JEL classification:
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-03-14 (All new papers)
NEP-EDU-2004-03-14 (Education)

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