Dishonesty in health care practice: A behavioral experiment on upcoding in neonatology

Hennig‐Schmidt, Heike; Jürges, Hendrik; Wiesen, Daniel

doi:10.1002/hec.3842

Cited by 26 publications

(22 citation statements)

References 92 publications

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“…Both Belot and Schröder (2016) and Galeotti, Maggian, and Villeval (2018) point out that monitoring can improve outcomes but may also have adverse spillover effects in unmonitored contexts. This is also found in Hennig-Schmidt et al (2019): When introducing monitoring, dishonest reporting of birth weights in contexts where monitoring cannot detect dishonesty significantly increases the level of dishonest reporting compared to situations with no monitoring. Overall, the results from previous monitoring experiments suggest that monitoring may be an effective way to change an individual's behavior.…”

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confidence: 64%

Monitoring institutions in healthcare markets: Experimental evidence

2021

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This paper investigates the impact of monitoring institutions on market outcomes in health care. Healthcare markets are characterized by asymmetric information. Physicians have an information advantage over patients with respect to appropriate treatments, which they may exploit through over-or under-provision or by overcharging. We introduce two types of costly monitoring: endogenous and exogenous monitoring. When monitoring detects misbehavior, physicians have to pay a fine. Endogenous monitoring can be requested by patients, while exogenous monitoring is performed randomly by a third party. We present a toy model that enables us to derive hypotheses and test them in a laboratory experiment. Our results show that introducing endogenous monitoring reduces the level of undertreatment and overcharging. Even under high monitoring costs, the threat of patient monitoring is sufficient to discipline physicians. Exogenous monitoring also reduces undertreatment and overcharging when performed sufficiently frequently. Market efficiency increases when endogenous monitoring is introduced and when exogenous monitoring is implemented with sufficient frequency. Our results suggest that monitoring may be a feasible instrument to improve outcomes in healthcare markets. K E Y W O R D Scredence goods, laboratory experiment, monitoring, overtreatment, overcharging, physician behavior, undertreatment | INTRODUCTIONA key characteristic of healthcare markets is information asymmetry between patients and physicians. Patients consult physicians for treatment without knowing what type of treatment is needed to cure their illness. When diagnosing patients, physicians learn the true nature of the presenting disease and may exploit their informational advantage over patients through three forms of misbehavior: providing more treatment than necessary (overtreatment), charging for more treatment than provided (overcharging), and providing less treatment than necessary (undertreatment). Patients must trust that their physician is providing them with appropriate treatment, and as such, health services are often referred to as credence goods (Darby & Karni, 1973;Dulleck & Kerschbamer, 2006). Empirical evidence has documented physicians' reactions to financial incentives, suggesting that over-and undertreatment as well as overcharging are prevalent phenomena (

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confidence: 64%

Monitoring institutions in healthcare markets: Experimental evidence

2021

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“…The Physician can report any type of Patient (L, M, or H) independently of the true type of the Patient . Therefore, it is possible to report false information—which we call misreporting (Two recent papers, Hennig-Schmidt et al [ 30 ] and Groß et al [ 47 ], provide an experimental investigation specifically on misreporting by physicians.). Two kinds of misreporting are possible—overreporting and underreporting.…”

Section: Experimental Designmentioning

confidence: 99%

“…This is not the only common way to organize hospital reimbursement, and physician behavior under PPS has also been subject to many economic studies (e.g., Davis and Rhodes [ 22 ], Moreno-Serra and Wagstaff [ 23 ], Cutler [ 24 ]). The evidence is accruing that physicians over-report patient severity under PPS in order to increase reimbursement (see results from administrative data in Dafny [ 25 ], Silverman and Skinner [ 26 ], Jürges and Köberlein [ 27 ], Fang and Gong [ 28 ], Reif et al [ 29 ], and the recent laboratory experiment by Hennig-Schmidt et al [ 30 ]). There is however mixed evidence on whether the extra reimbursement is used to improve care, enrich the physician, or both.…”

Section: Introductionmentioning

confidence: 99%

Physician Behavior under Prospective Payment Schemes—Evidence from Artefactual Field and Lab Experiments

Reif

Hafner

Seebauer

2020

IJERPH

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Recent experimental studies analyze the behavior of physicians towards patients and find that physicians care for their own profit as well as patient benefit. In this paper, we extend the experimental analysis of the physician decision problem by adding a third party which represents the health insurance that finances medical service provision under a prospective payment scheme. Our results show that physicians take into account the payoffs of the third party, which can lead to underprovision of medical care. We conduct a laboratory experiment in neutral as well as in medical framing using students and medical doctors as subjects. Subjects in the medically framed experiments behave weakly and are more patient orientated in contrast to neutral framing. A sample of medical doctors exhibits comparable behavior to students with medical framing.

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“…Recent research indicates that a mixed system might also benefit patients (Brosig-Koch et al, 2017). Beyond neonatology, recent research indicates that the use of audits and fines may significantly reduce fraudulent provider behavior (Hennig-Schmidt et al, 2018). This type of policy response might be considered as a more general option for preventing fraudulent provider behavior.…”

Section: Resultsmentioning

confidence: 99%

Losing body weight for money: How provider‐side financial incentives cause weight loss in Swiss low‐birth‐weight newborns

Hochuli

2020

Health Economics

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Facing steadily rising health care costs, Switzerland introduced a system of diagnosis‐related groups (DRGs) for hospital payment in 2012 (SwissDRG) along with cost‐efficiency benchmarking between hospitals. On the one hand, SwissDRG puts hospitals at financial risk and strengthens incentives for efficiency by setting a fixed price per case. On the other hand, hospitals are incentivized to game the system and exploit adverse incentives. We investigate hospitals' behavioral response to financial incentives in Swiss neonatology. First, we provide strong evidence for manipulations of reported birth weight among low‐birth‐weight newborns. Using a difference‐in‐difference‐in‐difference design, we find that 14–27% of birth weights are manipulated around specific birth weight cutoffs. Second, we find evidence of an upward‐sloping supply curve of cheating, indicating that hospitals increasingly engage in fraudulent behavior as financial incentives increase. Our estimates indicate a supply‐sided price elasticity of cheating between 0.16 and 0.52.

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Dishonesty in health care practice: A behavioral experiment on upcoding in neonatology

Cited by 26 publications

References 92 publications

Monitoring institutions in healthcare markets: Experimental evidence

Monitoring institutions in healthcare markets: Experimental evidence

Physician Behavior under Prospective Payment Schemes—Evidence from Artefactual Field and Lab Experiments

Losing body weight for money: How provider‐side financial incentives cause weight loss in Swiss low‐birth‐weight newborns

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