IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Separating the True Effect from Gaming in Incentive-Based Contracts in Health Care

Listed author(s):
  • Mingshan Lu

This 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.

If 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.

File URL:
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

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.

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 8 (1999)
Issue (Month): 3 (September)
Pages: 383-431

in new window

Handle: RePEc:bla:jemstr:v:8:y:1999:i:3:p:383-431
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:8:y:1999:i:3:p:383-431. See general information about how to correct material in RePEc.

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.