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Title
Setting capitation payments in markets for health services.
First Author
Ellis, Randall P
Date of Pub
1987 Summer
Pages
55-64
Volume
8
Issue
4
Other Authors
McGuire, Thomas G
Abstract
Health maintenance organizations (HMO's) are paid a capitated amount for enrolled Medicare beneficiaries that is 95 percent of what these enrollees would be expected to cost in the fee-for-service sector. However, it appears that HMO enrollees are less costly than other Medicare beneficiaries. With a simulation model, we demonstrate that with a 95-percent pricing rule, any significant degree of biased selection leads to increased cost to the payer, even when HMO's are cost effective compared with the fee-for-service sector. Optimal pricing percentages from the point of view of cost minimization are considerably less than 95 percent.
Abstract Continued
N/A
MeSH
Capitation Fee : Fees and Charges : Costs and Cost Analysis : Health Maintenance Organizations/economics : Medicare/economics : Models, Theoretical : Rate Setting and Review/methods : Risk : Statistics : Support, Non-U.S. Gov't : Support, U.S. Gov't, Non-P.H.S. : United States : United States Health Care Financing Administration
NTIS Number
PB88-131339