Abstract：
:I study a managed health service market where differentiated providers compete for consumers by choosing multiple service qualities, and where copayments that consumers pay and payments that providers receive for services are set by a payer. The optimal regulation scheme is two-sided. On the demand side, it justifies and clarifies value-based reference pricing. On the supply side, it prescribes pay for performance when consumers misperceive service benefits or providers have intrinsic quality incentives. The optimal bonuses are expressed in terms of demand elasticities, service technology, and provider characteristics. However, pay for performance may not outperform prospective payment when consumers are rational and providers are profit maximizing, or when one of the service qualities is not contractible.
journal_name
J Health Econjournal_title
Journal of health economicsauthors
Mak HYdoi
10.1016/j.jhealeco.2017.11.002subject
Has Abstractpub_date
2018-01-01 00:00:00pages
131-146eissn
0167-6296issn
1879-1646pii
S0167-6296(17)30001-2journal_volume
57pub_type
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