Risk sharing and moral hazard under prospective payment to hospitals: how to reimburse services for outlier patients

François Maréchal and Michel Mougeot

Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) from Université de Lausanne, Faculté des HEC, DEEP

Abstract: We analyze the regulation of a single health care provider (e.g. a hospital). According to several payment rules used in different countries, we consider a mixed linear payment in which the hospital is paid a fixed price per DRG (diagnosis related group) for most patients (inlier patients) and is reimbursed by a cost sharing payment for patients with exceptionally costly stays (outlier patients). Given this form of payment, we determine the optimal threshold above which to consider a patient as an outlier patient, as well as the optimal payment per DRG and the optimal cost sharing parameter. For the case where the regulator can use a two part tariff, we also determine the fixed charge the regulator has to impose in order to extract hospital rents.

Keywords: hospitals payment; cost; quality; incentives; DRG; risk sharing (search for similar items in EconPapers)
JEL-codes: I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu
Date: 2004-03
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