Risk sharing and the supply of mental health services

This paper examines the effects of risk sharing with mental health provider s in a managed care context. The results show that providers that received a fixed payment per case reduced the number of outpatient visits by 20-25%, compared with providers who continued to be paid for each visit. This effe ct was stronger for integrated group practices and providers with more inte nsive utilization review protocols. In addition, evidence was found that in a setting where providers serve multiple payers, the share of their total revenue derived from risk-sharing contracts is an important determinant of the magnitude of the supply response. (C) 2000 Elsevier Science B.V. All ri ghts reserved. JEL classification: I1, L2.