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Incentive Compatible Reimbursement Schemes for Physicians

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  • Emons, Winand

Abstract

We 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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  • Emons, Winand, 2010. "Incentive Compatible Reimbursement Schemes for Physicians," CEPR Discussion Papers 7659, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7659
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    Cited by:

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    2. Felix C.H. Gottschalk, 2019. "Why prevent when it does not pay? Prevention when health services are credence goods," Health Economics, John Wiley & Sons, Ltd., vol. 28(5), pages 693-709, May.

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    More about this item

    Keywords

    Credence goods; Demand inducement; Expert services; Incentives; Insurance; Medical doctors;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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