Incentive Compatible Reimbursement Schemes for Physicians
AbstractWe consider physicians with fixed capacity levels. If a physician's capacity exceeds demand, she may have an incentive to overtreat, i.e., she may provide unnecessary treatments to use up idle capacity. By contrast, with excess demand she may undertreat, i.e., she may not provide necessary treatments since other activities are financially more attractive. We first show that simple fee-for-service reimbursement schemes do not provide proper incentives. If insurers use, however, fee-for-service schemes with quantity restrictions, they solve the fraudulent physician problem.
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Date of creation: Jan 2010
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credence goods; expert services; incentives; medical doctors; demand inducement; insurance;
Other versions of this item:
- Winand Emons, 2013. "Incentive-Compatible Reimbursement Schemes for Physicians," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(4), pages 605-620, December.
- Emons, Winand, 2010. "Incentive Compatible Reimbursement Schemes for Physicians," CEPR Discussion Papers 7659, C.E.P.R. Discussion Papers.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-04 (All new papers)
- NEP-CTA-2010-06-04 (Contract Theory & Applications)
- NEP-IAS-2010-06-04 (Insurance Economics)
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