Rate Setting and Health Maintenance Organizations

Fall 1996
Journal of Health Politics, Policy and Law , vol.21, no.3 (Fall 1996): 511-513
Paul B. Ginsburg

insburg comments on the work of Wallack, Skwara and Cai on the compatibility of competition and regulation in health care. They offer sound arguments that some design elements of rate-setting systems are more compatible with competition than others. Ginsburg however, argues against making regulated payment rates applicable to HMOs because the plans do not need a regulatory ceiling on prices, and making payment units mandatory risks interfering with HMOs’ use of financial incentives to influence the use of physicians services, particularly specialists. Incentives include fee-for-service payment, withholding partial payment and allocation of bonuses. These payment methods are continually evolving and are considered a key element of managed care.

For a full copy please visit Journal of Health Policy, Politics and Law. (Subscription required.)