"Incentive for Gatekeepers and Their Demand Inducement: An Empirical Analysis of Care Managers in the Japanese Long-Term Care Insurance"

Sugawara, Shinya and Jiro Nakamura

This study analyzes incentives and supplier-induced demand of care man- agers, middlemen between consumers and service providers in the Japanese social insurance program for long-term care. Care managers can be consid- ered as pure gatekeepers in that their function is limited to referral to spe- cialists and they themselves do not provide care. Rewards for care managers are rendered by capitation, which is considered as a cost-effective payment mechanism for insurers. However, many care managers actually work for rms that also operate service provision sectors. The service providers are rewarded by the fee-for-service payment and have motivation to induce ex- cess consumer demand. Thus, the violation of neutrality of care managers might yield an nancial burden on social insurance. In this study, we em- pirically analyze the behavior of care managers by checking whether they cause supplier-induced demand. Our estimation results detect the existence of care manager-induced demand for care managers who work for rms that jointly operate in service provision sectors; however, those who operate only care management do not induce demand. Based on the estimation results, we conduct a quantitative analysis and show that the care manager-induced produces a considerable nancial burden on social insurance. Keyword: Elderly care; Gatekeepers; Incentive; Supplier-induced demand; Japanese Long-Term Care Insurance program; Care managers