Question

In: Economics

1. What is prospective payment system? What are its effects on the cost, quality, creaming and...

1. What is prospective payment system? What are its effects on the cost, quality, creaming and dumping incentives on a healthcare provider?

2. In which of the following ways is cost-benefit analysis different from cost-utility/cost-effectiveness analysis for evaluating health interventions or public programs? If one of these is not a way in which they differ, briefly explain what is wrong with the statement.

a. Cost-benefit analysis compares societal costs and benefits whereas cost-utility analysis looks only at gains to specific people.

b. Cost-benefit analysis is worse than cost-utility analysis in settings where there are externalities (for example, price signals do not work).

c. Cost-benefit analysis uses present discounted values to account for long run impacts of interventions while cost-utility analysis does not.

d. Cost-benefit analysis weights the utility of being sick and of being well differently while cost utility analysis does not.

3. What is small area variation (SAV)? Find and summarize the main results of 3 recent studies on SAV (published within the last 10 years). What sort of economic inefficiency could result from SAV?

4. In Canada, the College of Physicians and Surgeons' imposes limitations on advertising by physicians. Some argue that because this regulation reduces the degree of competition in the health care market, ceteris paribus, it would reduce social welfare. Do you agree? Why?

Expert Solution

Ans 1.

Prospective payment system(PPP) refers to the payment method for determining insurance reimbursement based on the predetermined payment regardless of the actual service provided.It is a system used for paying hospitals based on predetermined prices . Payments are based on the codes provided on the insurance claim.Prospective payment system was developed to encourage hospitals to lower their prices for expensive hospital care.

The effects of prospective payment system to healthcare provider on:

1. Cost.

Healthcare provider recovers the per visit specific amount for the services provided to the patient irrespective of the period for which the service is provided.

2. Quaity.

Healthcare provider places more emphasis on providing quality service by allowing the diagnosis and treatment of patient as efficiently as possible.Since the hospitals will not receive any extra payment for the unnecessary treatment sessions which are added by the hospitals for increasing the hospital revenue.

3. Creaming.

Public healthcare provider practise of creaming that is selecting low severity patients and not the needy patients due to association of high profit with the same is reduced because the heallthcare providers receive the fixed amount irrespective of the period for which the service is provided.

4. Dumping.

Dumping means refusing treatment of patients involving high treatment costs for avoiding financial risk. Under prospective payment system dumping practise is reduced since the health care providers receive the fixed amount according to the groups made by the hospital based on the diseases.

Rahul Sunny answered 6 months ago

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