The Effects of Physicians’ Financial Incentives on the Effectiveness of Taiwan’s Outpatient Drug Copayment Policy

Abstract

This study examines how physicians' financial incentives affect the effectiveness of the outpatient drug copayment policy in Taiwan under National Health Insurance (NHI). Our sample of 1,301,599 patients aged less than 65 years was drawn from 21 hospitals for the study. We use analysis of variance to better understand possible reasons for changes in drug costs. Regression analysis is invoked to investigate the effect of physicians' financial incentives on drug utilization after the implementation of the drug copayment policy.The results indicate that total drug costs increase after the implementation of the co-payment policy because of increases in average drug price per prescription and drug utilization. In addition, the results indicate that hospitals with physician fee programs that include drug revenue have longer duration per prescription and higher drug items per prescription. From Taiwan's experience, we infer that physicians' financial incentives could have an impact on the effectiveness of polici...