Unintended effects of reimbursement schedules in mental health care

We evaluate the introduction of a reimbursement schedule for self-employed mental health care providers in the Netherlands in 2008. The reimbursement schedule follows a discontinuous discrete step function-once the provider has passed a treatment duration threshold the fee is flat until a next threshold is reached. We use administrative mental health care data of the total Dutch population from 2008 to 2010. We find an "efficiency" effect: on the flat part of the fee schedule providers reduce treatment duration by 2 to 7% compared to a control group. However, we also find unintended effects: providers treat patients longer to reach a next threshold and obtain a higher fee. The data shows gaps and bunches in the distribution function of treatment durations, just before and after a threshold. About 11 to 13% of treatments are shifted over a next threshold, resulting in a cost increase of approximately 7 to 9%.