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Nonresponsiveness, Severity Auditing, and Upcoding Deterrence

Author

Listed:
  • Michel Mougeot

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

  • Florence Naegelen

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

Abstract

In many countries, the diagnosis-related group system has been expanded to address patient severity. This paper highlights a fundamental drawback of any price refinement policy under adverse selection. Without auditing, no mechanism such that high-severity patients receive more intensive treatment than low-severity patients can ensure that providers are deterred from upcoding. In contrast, we show that splitting can be implemented if the regulator designs an auditing mechanism when the proportion of low-severity patients is sufficiently high. The optimal level of services increases with severity under conditions depending on the net social benefit function and on the cost function.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Michel Mougeot & Florence Naegelen, 2018. "Nonresponsiveness, Severity Auditing, and Upcoding Deterrence," Post-Print hal-01816853, HAL.
    • Handle: RePEc:hal:journl:hal-01816853
    DOI: 10.1628/jite-2018-0011
    as

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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