title: Physician Payment Contracts in the Presence of Moral Hazard and Adverse Selection: The Theory and Its Application in Ontario.
abstract: We develop a stylized principal-agent model with moral hazard and adverse selection to provide a unified framework for understanding some of the most salient features of the recent physician payment reform in Ontario and its impact on physician behavior. These features include the following: (i) physicians can choose a payment contract from a menu that includes an enhanced fee-for-service contract and a blended capitation contract; (ii) the capitation rate is higher, and the cost-reimbursement rate is lower in the blended capitation contract; (iii) physicians sort selectively into the contracts based on their preferences; and (iv) physicians in the blended capitation model provide fewer services than physicians in the enhanced fee-for-service model. Copyright © 2015 John Wiley & Sons, Ltd.
authors.affiliation: Ontario Medical Association, Toronto, Canada.|Canadian Centre for Health Economics, Toronto, Canada.|Institute for Labor Studies, Bonn, Germany.|University of Toronto, Toronto, Canada.
authors.forename: Jasmin
authors.initials: J
authors.lastname: Kantarevic
authors.affiliation: Ontario Medical Association, Toronto, Canada.
authors.forename: Boris
authors.initials: B
authors.lastname: Kralj
mesh_terms: D002204:Capitation Fee / Q000706:statistics & numerical data*; D003284:Contract Services / Q000379:methods*; D018588:Fee-for-Service Plans / Q000191:economics / Q000706:statistics & numerical data*; D005260:Female; D005102:Health Expenditures; D006801:Humans; D008297:Male; D009864:Ontario; D010820:Physicians / Q000191:economics / Q000706:statistics & numerical data*
keywords: Ontario; adverse selection; moral hazard; physician remuneration