Supply-side risk adjustment and outlier payment policy

Michel Mougeot and Florence Naegelen

Journal of Health Economics, 2008, vol. 27, issue 5, 1196-1200

Abstract: In most health care systems where a prospective payment system is implemented, an outlier payment is used to cover the hospitals' unusually high costs. When the hospital chooses its cost reduction effort before observing a patient's severity, we show that the best outlier payment is based on the realized cost when the hospital exerts the first best level of effort, for any level of severity.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:27:y:2008:i:5:p:1196-1200

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