Provider payment incentives - Base payment, financial risk & empirical research - Financial risk

5 important questions on Provider payment incentives - Base payment, financial risk & empirical research - Financial risk

What is insurance / probability risk?

Encompasses the incidence of illness and costs of care that are beyond the control and/or responsibility of the provider. Therefore, this risk should be held by the payer or the insurer.

What is performance / technical risk?

Encompasses the utilization and costs that are under the providers control. This risk should be held by the provider or the delivery system.

What is risk bearing?

payer bears full risk
  • provider has no incentive to work cost-effectively because there are no consequences to their actions
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What is risk shifting?

Provider bears full risk
  • This includes the insurance risk. The provider becomes fully responsible for spending that is beyond his control

What is risk sharing?

Provider an payer bear both risks together
  • Feasible in practice
  • The challenge facing the payer will then be the insurance risk without sacrificing their performance risk an thus making them cost-conscience

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