Methods of compensating physicians contracting with managed care organizations

Effects of compensation methods and physician group structure on physicians' perceived incentives to alter services to patients

OBJECTIVE

To examine how health plan payment, group ownership, compensation methods, and other practice management tools affect physician perceptions of whether their overall financial incentives tilt toward increasing or decreasing services to patients.

DATA SOURCE

Nationally representative data on physicians are from the 2000-2001 Community Tracking Study Physician Survey (N=12,406).

STUDY DESIGN

Ordered and multinomial logistic regression were used to explore how physician, group, and market characteristics are associated with physician reports of whether overall financial incentives are to increase services, decrease services, or neither.

PRINCIPAL FINDINGS

Seven percent of physicians report financial incentives are to reduce services to patients, whereas 23 percent report incentives to increase services. Reported incentives to reduce services were associated with reports of lower ability to provide quality care. Group revenue in the form of capitation was associated with incentives to reduce services whereas practice ownership and variable compensation and bonuses for employee physicians were mostly associated with incentives to increase services to patients. Full ownership of groups, productivity incentives, and perceived competitive markets for patients were associated with incentives to both increase and reduce services.

CONCLUSIONS

Practice ownership and the ways physicians are compensated affect their perceived incentives to increase or decrease services to patients. In the latter case, this adversely affects perceived quality of care and satisfaction, although incentives to increase services may also have adverse implications for quality, cost, and insurance coverage.

HMO financial arrangements with rural physicians

The growth of managed care in general suggests that a substantially larger number of rural primary care physicians will be asked to enter into risk-bearing contracts with Health Maintenance Organizations (HMOs) in the near future. This article describes the different types of payment and risk-sharing arrangements that exist between HMOs and primary care physicians and presents survey data relating to their prevalence in rural areas. Also, it describes in detail the payment arrangements used by four HMOs that contract with rural primary care physicians. The concluding discussion highlights policy issues regarding risk-sharing arrangements that are especially pertinent in rural settings.

Behind the curve: a critical assessment of how little is known about arrangements between managed care plans and physicians

Extraordinary growth in managed care arrangements over the past decade has been both widely praised and criticized. Proponents and critics agree that the nature of medical practice is being profoundly altered by this growth, even if they cannot articulate the direction and consequences of this change. We explore the roots of this uncertainty by examining the available evidence on critical features of the arrangements managed care plans currently have with affiliated physicians. Our approach is to review and synthesize the literature in several key substantive areas from a broad range of sources. We found that existing knowledge is dated, derived form a limited subset of plans, inattentive to important structural differences between plans, and responsive to a very narrow set of issues poorly reflecting the range of medical practice and change introduced by managed care. We highlight key questions of interest and the knowledge gaps critical to address so that policy and management decisions can both reflect and be informed on these issues that define the arrangements managed care plans make with physicians and ultimately influence medical practice.