Provider Payment Methods and Incentives

Abstract

Diverse provider payment systems create incentives that affect the quantity and quality of health care services provided. Payments can be based on provider characteristics, which tend to minimize incentives for quality and quantity. Or payments can be based on quantities of services provided and patient characteristics, which provide stronger incentives for quality and quantity. Payments methods using both broader bundles of services and larger numbers of payment categories are growing in prevalence. The recent innovation of performance-based payment attempts to target payments on key patient attributes so as to improve incentives, better manage patients, and control costs.

Governance In Health Care Delivery : Raising Performance

“…However, it faces challenges in finding appropriate measures to assess provider performance. Performance pay may also induce physicians to choose not to treat risky patients within a payment category or to avoid treatments that do not receive bonuses, may undermine intrinsic motivation, and often bonuses become regular payments for all providers effectively removing the incentive to perform better (Ellis and McKinnon Miller 2007). Despite recent interest and a growing number of initiatives adopting pay for performance in developed countries there is scant evidence on its effect on health worker performance.…”

The Impact of Hospital Payment Schemes on Healthcare and Mortality: Evidence from Hospital Payment Reforms in OECD Countries

“…Researchers have drawn a causal link between the recent reforms in hospital payment schemes and the concomitant trends in healthcare expenditure and mortality (Cutler, 1993;Yip and Eggleston, 2001;Moreno-Serra and Wagstaff, 2010). The various payment schemes operating in developed countries create different incentives for hospital care provision (Cylus and Irwin, 2010;Ellis and Miller, 2008), which, in turn, may influence healthcare expenditures. 1 Moreover, several studies using OECD country panel data have indicated that healthcare expenditure positively affects life expectancy, even when several confounders are controlled for (Elola et al, 1995;Or, 2000;Lichtenberg, 2002;Shaw et al, 2002;Miller and Frech, 2002;Berger and Messer, 2002;Hitiris and Posnett, 1992;Nixon and Ulmann, 2006).…”

Medical professionals’ responses to a DRG performance management system for hospital care in the Netherlands. Reinterpreting ‘perverse effects’, such as upcoding and patient selection, using arguments of professionalism and managerialism

“…Cherry picking, also known as "cream skimming" refers to hospitals or medical specialists being strategic in the patients they accept and the treatments they choose to provide (Ellis 2001, Ellis andMiller 2008). Hereby, cream skimming can refer to risk-profiling of patients the accepted for treatment, but also the selection of treatments that a medical institution chooses to provide (Levaggi andMontefiori 2003, Berta et al 2010).…”