The Biggest Difference Between Using a Pigovian Tax or a Tradable

question 109

Multiple Choice

The biggest difference between using a Pigovian tax or a tradable allowance to correct for a negative externality is:

• A) the government collect revenues from the tax, and the private parties trade quota rights on their own.
• B) the tax creates an efficient outcome, and the tradable allowances do not.
• C) the tax maximizes total surplus, but the tradable allowances do not.
• D) All of these are differences between the two government policies.

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Definitions:

ICD-9-PCS

International Classification of Diseases, Ninth Revision, Procedure Coding System; a system used in the United States for classifying medical procedures for billing and documentation.

Diagnosis Code

Diagnosis Code refers to a code assigned to a diagnosis based on a standardized system, such as the International Classification of Diseases (ICD), used for healthcare billing and statistics.

Upcoding

Reporting a higher-level code than is appropriate for the service that was rendered, resulting in higher reimbursement; when a facility coder assigns a diagnosis code that does not match patient documentation, with the intention of increasing reimbursement to the facility through the DRG system, serious penalties and fines will be levied against the facility for submitting fraudulent claims.

DRG System

Diagnosis-Related Group (DRG) system is a way of categorizing hospital cases into groups for the purposes of payment, reflecting typical resource usage for a stay.