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We evaluate the relationship between insurers (payers) and providers of health care (hospitals) when they each have a nonnegligible share of the market. We focus in particular on their incentives to merge and the existence of equilibria where payers offer preferential treatment to a subset of...
We examine how to procure health care services at minimum cost while preventing suppliers from refusing to care for high‐cost patients. A single risk‐adjusted prospective payment is optimal only when it is particularly costly for the supplier to discover likely treatment costs. Cost sharing is...
This paper studies the effect of incentive regulation on health care. In the context of incentive‐based health contracts, which might also introduce an incentive for the providers simply to report better treatment outcomes, evaluation of treatment using the information supplied by the providers...
This paper evaluates the usefulness of a model (McClellan, 1997) that was recently proposed for measuring reimbursement incentives under ongoing refinements to the hospital prospective payment system. The model is applied to a single major disease category (HIV infection) for which the hospital...
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