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Fee Equalization and Appropriate Health Care

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  • Emilia Barili
  • Paola Bertoli
  • Veronica Grembi

Abstract

Fee equalization in health care brings under a unique tariff several medical treatments, coded under different Diagnosis Related Groups (DRGs). The aim is to improve healthcare quality and efficiency by discouraging unnecessary, but better-paid, treatments. We evaluate its effectiveness on childbirth procedures to reduce overuse of c-sections by equalizing the DRGs for vaginal and cesarean deliveries. Using data from Italy and a difference-in-differences approach, we show that setting an equal fee decreased c-sections by 2.5%. This improved the appropriateness of medical decisions, with more low-risk mothers delivering naturally and no significant changes in the incidence of complications for vaginal deliveries. Our analysis supports the effectiveness of fee equalization in avoiding c-sections, but highlights the marginal role of financial incentives in driving c-section overuse. The observed drop was only temporary and in about a year the use of C-section went back to the initial level. We found a greater reduction in lower quality, more capacity-constrained hospitals. Moreover, the effect is driven by districts where the availability of Ob-Gyn specialists is higher and where women are predominant in the gender composition of Ob-Gyn specialists.

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  • Emilia Barili & Paola Bertoli & Veronica Grembi, 2020. "Fee Equalization and Appropriate Health Care," CERGE-EI Working Papers wp664, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp664
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    References listed on IDEAS

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    1. Lippi Bruni, Matteo & Ugolini, Cristina & Verzulli, Rossella, 2021. "Should I wait or should I go? Travelling versus waiting for better healthcare," Regional Science and Urban Economics, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    fee equalization; Cesarean sections; difference in differences;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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