Page 199 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

General Discussion
compensate by increasing treatment intensity and reimbursement rates17, unless purchasers anticipate reductions in demand in their budget negotiations. In that case, cost sharing may reduce total costs, with standard consequences on the provider expenses side (reduced profits, employment, inputs and/or investments).
Benefit package restrictions may reduce demand by reducing the utility of people to seek care: as some benefits cannot be obtained, people refrain from seeking care. Alternatively, benefit restriction may require people to pay the full price of treatment if they seek care, which drastically increase the cost sharing curve, and refrain people from seeking care. As benefit restrictions are based on actual health status rather than perceived health status, patients may oppose benefit restrictions. In both cases, demand is reduced and similar findings result as in the previous case: unless payers anticipate reductions in demand, purchasers compensate reduced demand by increasing treatment intensity. Furthermore, it may be conceivable that benefit package restrictions have little influence on patients’ decision to seek care. However, benefit package restrictions may limit provider treatment intensity for some patient groups. Providers can compensate this by increasing reimbursement rates or treatment intensity of unrestricted patient groups in the case of block grant negotiations or in the case of PxQ-negotiations or reimbursement rate negotiations, the utility of agreement of providers is lower, reducing the provider bargaining surplus, which increases the bargaining outcome. This effect partly compensates for cost containment effects. In conclusion, providers respond to benefit package restrictions by (1) increasing treatment intensity (of unrestricted patient groups), (2) increasing bargaining efforts/internal reimbursement rates. Therefore, cost containment effects of benefit restrictions may be limited.
Benefit package restrictions
Managed care organisations have been proposed as cost containment policy. Managed care organisations are allowed to have limited provider networks, increasing the utility of exclusion of a provider from the network. As a result, payer bargaining surplus is lower, reducing provider budgets and the number of providers. However, as we have seen, if supply-side cost containment is successful, waiting lists may emerge, unless demand, reimbursement rates or treatment intensity is reduced. MCO’s may respond to this by negotiating reductions in reimbursement rates, utilization controls and prior authorization
Managed care organisations
17 If cost sharing is a function of reimbursement rates, hospitals are limited in increasing reimbursement rates as
a response to lower demand, and budget reductions may be more likely.
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