8 at the state and municipal level. In this way, curative and prevartive services would be financed by the same iistitution. While the incentives inherent in this reform fo, redressing resource allocation problems are e!ear, Brazil has been slow to implement the plan (Briscoe, 1990), and thus its effects have not yet been observed.

**Cost escalation.** There are few empirical data with uhich the impact of INAMPS reforms on health care cost escalation since 1983 can be ar:alyzed. A study of Brazilian hospitalization during the 1980s (Rodrigues, 1989) concluded that the change to cas.-based reimbursement did not appear to be effective in controlling health care costs becduse it created an incenitive for private hospitals to increase certain types of admissions. In addition, although a system of prospectively set reimbursement rates encourages providers to economize Ca the level of resources allocated to the care of an individual patient, such a system also provides incentives for hospitals to maximize the volume of profitable admissions. Howeve. to date there have been no expenditure data available to sompare the effects on total hospital costs of the fee-for-service system with the case-based system.'

**Resource allocation.** The case-based reimbursement system created inceiitives for private hospitals to adjust their inpatient case rnix. With a limited number of case payment groups, there will be patients of varying severity within each category. INAMPS reportedly set payment rates based on average reimbursement within a category (Rodrigues, 1989). One way that hospital, could minimize their resource inputs per case would be to treat the less severe patients within a category and try to shifL sicker patients to public hospitals. Rodrigues concluded that private hospitals did, in fact, shift more costly patients to public and university hospitals, leaving themselves with a less severe case mix for which profit margins per patient were greater. Supporting evidence is provided by Briscoe (1990), who examined inpatient mortality data and concluded that patients in public hospitals had significantly more severe conditions, on average, thai. those in private hospitals.

In terms of resource allocation between cuiative **aid** preventive caru, the trend towards a decreasing preventive share apparently reversed itself, as 78 percent of health expenditures were devoted to curative care in 1986, down from 85 percent in 1982 (World Bank data). This change occurred before the SUDS was announced, and although this approach would seem to allow for a reallocation of health resources toward a more cost effective mix of preventive and curative care services, there are as yet no data upon which an evaluation of this reform can be made.

Medical technology incentives. There is little information available on the utilization of specific medical technologies since 1983. The case-based payment system should have diminished the overuse of complementary diagnostic tests and other services which was prevalent under the earlier system. In addition, some controls over the use of high-technology services were instituted. Nevertheless, Briscoe (1990) reports that INAMPS paid over three percent of its total budget in 1988 on just four outpatient treatment procedures (hemodialysis, hemodynamic studies, endoscopy, and computerized tomography). Thus, further controls or limitations of INAMPS financing of hightechnology services may be needed.

The World Bank's LA I PH division is proposing to analyze newly accessible data on costs and utilization in private hospitals in Brazil covering the period 1981-1990. Hopefully, this will yield conclusions as to the effects of the change in reimbursement systems on cost escalation.