Final answer:
Best practices for cost sharing collection include the implementation of deductibles, copayments, and coinsurance to reduce moral hazard and encourage responsible use of insurance services without harming the health status of the insured.
Step-by-step explanation:
The best practice for cost sharing collection in insurance is to require the policyholder to pay a share of the costs. This can take the form of deductibles, copayments, or coinsurance.
- Deductibles are amounts paid out of pocket before insurance coverage kicks in, copayments are small fixed amounts paid for specific services.
- Coinsurance is a percentage of the costs that the policyholder is responsible for. These methods effectively reduce moral hazard, as they involve the policyholder in the financial responsibility of their claims, which deters from overusing insurance services.
This is exemplified by studies showing that individuals with these cost-sharing mechanisms use considerably fewer medical services without a detrimental effect on their health status.