Does a global budget superimposed on fee-for-service payments mitigate hospitals’ medical claims in Taiwan?

Taiwan’s global budgeting for hospital health care, in comparison to other countries, assigns a regional budget cap for hospitals’ medical benefits claimed on the basis of fee-for-service (FFS) payments. This study uses a stays-hospitals-years database comprising acute myocardial infarction inpatients to examine whether the reimbursement policy mitigates the medical benefits claimed to a third-payer party during 2000–2008. The estimated results of a nested random-effects model showed that hospitals attempted to increase their medical benefit claims under the influence of initial implementation of global budgeting. The magnitudes of hospitals’ responses to global budgeting were significantly attributed to hospital ownership, accreditation status, and market competitiveness of a region. The results imply that the regional budget cap superimposed on FFS payments provides only blunt incentive to the hospitals to cooperate to contain medical resource utilization, unless a monitoring mechanism attached with the payment system.