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February 2019
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Strong versus Weak Incentives: The Role of Policy, Management, and Theory in a New Research Agenda

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The papers in this Special Issue provide an excellent overview of the current state of the research literature around improving the value of the U.S. health care system and offer a range of sensible new directions for future research. The papers address both payment incentives, noting the strengths and weaknesses in theory and practice of fee-for-service, capitation, and salary payments; and informational incentives, including pay-for-performance (which combines payment and performance measurement), public reporting, peer review, and the role of patient-reported information. They point out that the most appropriate payment or information approach is likely to depend on the nature and setting of care. They also point to the layers and multiplicities of incentives that often exist in our fragmented health care system. Insurers may, for example, pay a group practice a capitation rate for services, while the practice pays its provider employees using salaries, or by fee-for-service. Payers may monitor hospital outcomes, while hospitals monitor the productivity of their employees. Medicare may offer hospitals bundled payments that include postacute care, while the dominant area private insurer may pay using hospital-only diagnosis-related groups (DRGs). The U.S. health care system is nothing if not complicated.

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