title: Supply-side risk adjustment and outlier payment policy.
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.
authors.affiliation: University of Franche-Comte, CRESE, Besançon Cedex, France. michel.mougeot@uiv-fcomte.fr
authors.forename: Michel
authors.initials: M
authors.lastname: Mougeot
authors.forename: Florence
authors.initials: F
authors.lastname: Naegelen
mesh_terms: D032982:Contracts / Q000191:economics; D004469:Economics, Hospital / Q000706:statistics & numerical data*; D005377:Financial Management, Hospital / Q000706:statistics & numerical data; D005380:Financing, Government / Q000379:methods*; D017721:Hospital Costs; D006801:Humans; D016344:Medicare Part A; D017059:Models, Econometric; D016311:Outliers, DRG / Q000191:economics* / Q000706:statistics & numerical data; D016016:Proportional Hazards Models; D011445:Prospective Payment System / Q000706:statistics & numerical data*; D020379:Risk Adjustment / Q000191:economics*; D012720:Severity of Illness Index; D014481:United States