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The role of payment models in shaping healthcare delivery and patient outcomes, and how insurance coverage changes doctors’ decisions, remains insufficiently understood. 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Sieberg *  \nCitation: Karunadasa, M.; Sieberg, K.K. Payment Systems, Insurance, and Agency Problems in Healthcare:  \nA Medically Framed Real-Effort Experiment. Games 2024, 15, 23 . [https://doi.org/10.3390/g15040023](https://doi.org/10.3390/g15040023)  \nReceived: 22 April 2024  \nRevised: 25 June 2024  \nAccepted: 26 June 2024  \nPublished: 28 June 2024  \nCopyright: © 2024 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license ([https://](https://)[ ](https://)[creativecommons.org/licenses/by/](creativecommons.org/licenses/by/)[ ](creativecommons.org/licenses/by/)[4.0/](4.0/)) .  \nFaculty of Social Sciences, Tampere University, Kanslerinrinne 1, 33014 Tampere, Finland; [manela.karunadasa@tuni.fi](manela.karunadasa@tuni.fi)  \n* [Correspondence: katri.sieberg@tuni.fi](Correspondence: katri.sieberg@tuni.fi)  \nAbstract: Background: This study aims to examine the impact of different healthcare payment systems, specifically salary and fee-for-service (FFS) models, on service provision, patient welfare, and quality of care. The influence of payment models on healthcare delivery and patient outcomes, as well as how these models affect doctors’ decision-making based on patients’ insurance coverage, isnot well understood. Methods: A medically framed real-effort task experiment was conducted. This study compared two payment systems: salary and FFS models. Key outcomes measured included the level of service provision, patient welfare, and quality of care. The analysis focused on how financial incentives and patient insurance coverage influenced healthcare decisions. Results: This study found overtreatment in FFS models and undertreatment in salary-based models. Healthcare decisions are significantly influenced by financial incentives and patient needs. Specifically, in FFS models, decisions are driven by self-interest, while in salary models, they are guided by patient needs. Within the FFS model, insurance coverage affects doctors’ decisions and patients’ benefits. Insured patients often receive unnecessary or incorrect procedures, indicating a supply-side moral hazard. Conclusions: Financial incentives and patient insurance coverage significantly influence healthcare decisions, with FFS models promoting self-interested decision-making and salary models focusing more on patient needs. This study contributes to the literature on supply-side moral hazard to health economics studies that use laboratory experiments to model medical decision-making.  \nKeywords: supply-side moral hazard; payment systems; insurance; fee-for-service; salary; supplier-induced demand; laboratory experiment  \n1. Introduction  \nThe healthcare industry’s payment systems are a central pillar to the functioning of healthcare delivery, with vast implications for the quality-of-service provision and, ultimately, patient outcomes. Primarily revolving around fee-for-service (FFS) and salary models, these payment systems have the power to shape the direction, efficiency, and effectiveness of healthcare service provision. However, the intricate dynamics of these systems and their full impacts are not always clearly understood. While theoretical investigations of the impact payment systems have on healthcare provisions are well recorded, testing these hypotheses using real-life data has been tricky. This is mainly because it is not always immediately obvious what the ideal level of treatment for a given health problem should be; thus, it is harder to show whether a given treatment or test was necessary or not. Given such challenges, laboratory experiments offer a controlled environment where researchers can manipulate and observe various factors from payment systems to quality of care. This allow","cbCaipkqcYSFaSf4","https://ap.wps.com/l/cbCaipkqcYSFaSf4","pdf",1034111,23,"English","# Introduction\n## Payment systems and healthcare delivery\n## Credence goods and supplier-induced demand\n## Incentives, insurance, and agency problems\n# Abstract\n## Background and aim\n## Methods\n## Results\n## Conclusions","[{\"question\":\"What is the purpose of this study on healthcare payment systems?\",\"answer\":\"To examine how salary and fee-for-service (FFS) payment models influence service provision, patient welfare, and quality of care, and how insurance coverage affects doctors’ decision-making.\"},{\"question\":\"How was the experiment conducted to compare payment systems?\",\"answer\":\"The study used a medically framed real-effort task experiment in a controlled laboratory setting, comparing salary and FFS payment models.\"},{\"question\":\"What did the results show about overtreatment and undertreatment?\",\"answer\":\"FFS models led to overtreatment, while salary-based models led to undertreatment. Financial incentives and patient needs significantly shaped healthcare decisions.\"}]","Payment Systems, Insurance, and Agency Problems in Healthcare - A Medically Framed Real-Effort Experiment | PDF",58]