Financial incentives and drug spending in managed care.
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This study estimates the impact of patient financial incentives on the use and cost of prescription drugs in the context of differing physician payment mechanisms. A large data set was developed that covers persons in managed care who pay varying levels of cost sharing and whose physicians are compensated under two different models: independent practice association (IPA)-model and network-model health maintenance organizations (HMOs). Our results indicate that higher patient copayments for prescription drugs are associated with lower drug spending in IPA models (in which physicians are not at risk for drug costs) but have little effect in network models (in which physicians bear financial risk for all prescribing behavior). (+info)
To tell the truth: disclosing the incentives and limits of managed care.
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As managed care becomes more prevalent in the United States, concerns have arisen over the business practices of managed care companies. A particular concern is whether patients should be made aware of the financial incentives and treatment limits of their healthcare plan. At present, managed care organizations are not legally required to make such disclosures. However, such disclosures would be advisable for reasons of ethical fidelity, contractual clarity, and practical prudence. Physicians themselves may also have a fiduciary responsibility to discuss incentives and limits with their patients. Once the decision to disclose has been made, the managed care organization must draft a document that explains, clearly and honestly, limits of care in the plan and physician incentives that might restrict the care a patient receives. (+info)
The impact of physician economic incentives on admission rates of patients with ambulatory sensitive conditions: an analysis comparing two managed care structures and indemnity insurance.
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The utilization of financial incentives to limit the use of health resources by primary care physicians represents a common reimbursement strategy by managed care organizations. These arrangements are virtually nonexistent with indemnity insurance. This analysis compares the hospitalization rates of patients with low-acuity medical conditions--ambulatory sensitive conditions (ASCs)--among three groups receiving care from primary care physicians. The physicians were compensated under different reimbursement mechanisms, in which incentives for reduced resource utilization varied. The groups can be described as follows: (1) a capitated for-profit group practice in which the physician partners have a relatively high economic incentive for lower utilization (group I); (2) physicians providing care under the auspices of three separate independent practice associations, in which the associations are capitated but the physicians are paid on a discounted fee-for-service basis (the associations also were included in this group) (group II); and (3) physicians who service patients whose care continues to be paid for by traditional indemnity insurance (group III). Financial incentives in the third group cohort were believed to be low to intermediate, and the physicians were assumed to have had no economic incentives to restrain their use of healthcare resources. Additional data analysis examined the role of emergency department utilization among patients in the groups. Group I patients ages 25 to 44 were admitted for ambulatory sensitive conditions at a significantly lower rate than were patients in groups II or III--0.8/1,000, 2.7/1,000, and 2.9/1,000, respectively. No difference was apparent in admission rates between patients in groups II and III. Overall emergency department utilization rates were lowest in the group I capitated panel (70/1,000), much higher in the group II independent practice association panel (363/1,000) and highest in the group III indemnity panel (466/1,000). Each of these rates was significantly different from the other. Both the ED utilization rate and ambulatory sensitive condition admission rate may have been affected by differences in socioeconomic status among the patient panels in the three groups. The overall effect of this variable on the two admission rates could not be isolated. (+info)
Impact of managed care on quality of healthcare: theory and evidence.
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Each strategy for managing healthcare risk has important and unique implications for the patient-provider relationship and for quality of care. Not only are different incentive structures created by different risk-sharing arrangements, but these incentives differ from those in a fee-for-service environment. With fee-for-service and traditional indemnity insurance, physicians have incentives to provide healthcare services of marginal value to the patient; under managed care, physicians have fewer incentives to provide marginally beneficial services. However, the impact of financial arrangements on quality of care remains ambiguous, because it depends on the strategic behavior of physicians with regard to their informational advantage over their patients. Using the framework of an agency theory model, we surveyed the current scientific literature to assess the impact of managed care on quality of care. We considered three different dimensions of quality of care: patient satisfaction, clinical process and outcomes of care measures, and resource utilization. Although we found no systematic differences in patient satisfaction and clinical process and outcomes between managed care and fee-for-service plans, resource utilization appears to be decreased under managed care arrangements. Given the strengths and weaknesses of fee-for-service and managed care, it is unlikely that either will displace the other as the exclusive mechanism for arranging health insurance contracts. Policy makers may be able to take advantage of the strengths of both fee-for-service and managed care financial arrangements. (+info)
Effect of compensation method on the behavior of primary care physicians in managed care organizations: evidence from interviews with physicians and medical leaders in Washington State.
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The perceived relationship between primary care physician compensation and utilization of medical services in medical groups affiliated with one or more among six managed care organizations in the state of Washington was examined. Representatives from 67 medical group practices completed a survey designed to determine the organizational arrangements and norms that influence primary care practice and to provide information on how groups translate the payments they receive from health plans into individual physician compensation. Semistructured interviews with 72 individual key informants from 31 of the 67 groups were conducted to ascertain how compensation method affects physician practice. A team of raters read the transcripts and identified key themes that emerged from the interviews. The themes generated from the key informant interviews fell into three broad categories. The first was self-selection and satisfaction. Compensation method was a key factor for physicians in deciding where to practice. Physicians' satisfaction with compensation method was high in part because they chose compensation methods that fit with their practice styles and lifestyles. Second, compensation drives production. Physician production, particularly the number of patients seen, was believed to be strongly influenced by compensation method, whereas utilization of ancillary services, patient outcomes, and satisfaction are seen as much less likely to be influenced. The third theme involved future changes in compensation methods. Medical leaders, administrators, and primary care physicians in several groups indicated that they expected changes in the current compensation methods in the near future in the direction of incentive-based methods. The responses revealed in interviews with physicians and administrative leaders underscored the critical role compensation arrangements play in driving physician satisfaction and behavior. (+info)
Influencing physicians: the three critical elements of a successful strategy.
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This activity is designed for leaders and managers of healthcare organizations, particularly those involved in the development of physician incentive and physician management programs. GOAL: To describe the challenges inherent in influencing physicians and review the essential elements of any successful strategy for achieving physician support and participation. OBJECTIVES: 1. Describe the reasons why healthcare organizations and medical groups need to influence physicians to be successful. 2. Cite the reasons why it is difficult to influence physicians. 3. Review the current strategies healthcare organizations and medical groups use to influence physicians. 4. Outline the three essential elements of any program designed to influence physicians. (+info)
Regulating the financial incentives facing physicians in managed care plans.
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Recent accounts of enrolees in managed care plans being denied access to potentially lifesaving services have heightened public anxiety about the impact of managed care on the accessibility and appropriateness of care, and this anxiety has been translated into legislative action. The present review focuses on an area of managed care operations that has received considerable attention in state legistlatures and in Congress during the past 2 years: the financial relationship between managed care health plans and physicians. Twelve states now mandate that managed care plans disclose information about their financial relationship with physicians, and 11 states regulate the method used by managed care health plans to compensate physicians. Most laws that regulate methods of compensation prohibit health plans from providing physicians an inducement to reduce or limit the delivery of "medically necessary" services. Moreover, in 1996 the Health Care Financing Administration finalized its regulations governing the financial incentives facing physicians in plans that treat Medicaid or Medicare patients, and these regulations went into effect on January 1, 1997. These regulations also are examined in this study. (+info)
Perceived financial incentives, HMO market penetration, and physicians' practice styles and satisfaction.
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OBJECTIVE: To estimate the effects of physicians' personal financial incentives and other measures of involvement with HMOs on three measures of satisfaction and practice style: overall practice satisfaction, the extent to which prior expectations about professional autonomy and the ability to practice good-quality medicine are met, and several specific measures of practice style. DATA SOURCES: A telephone survey conducted in 1997 of 1,549 physicians who were located in the 75 largest Metropolitan Statistical Areas in 1991. Eligible physicians were under age 52, had between 8 and 17 years of post-residency practice experience, and spent at least 20 hours per week in patient care. The response rate was 74 percent. STUDY DESIGN: Multivariate binomial and multinomial ordered logistic regression models were estimated. Independent variables included physicians' self-reported financial incentives, measured by the extent to which their overall financial arrangements created an incentive to either reduce or increase services to patients, the level of HMO penetration in the market, employment setting, medical specialty, exposure to managed care while in medical training, and selected personal characteristics. PRINCIPAL FINDINGS: About 15 percent of survey respondents reported a moderate or strong incentive to reduce services; 70 percent reported a neutral incentive; and 15 percent reported an incentive to increase services. Compared to physicians with a neutral incentive, physicians with an incentive to reduce services were from 1.5 to 3.5 times more likely to be very dissatisfied with their practices and were 0.2 to 0.5 times as likely to report that their expectations regarding professional autonomy and ability to practice good-quality medicine were met. They were also 0.2 to 0.6 times as likely to report having the freedom to care for patients the way they would like along several specific measures of practice style, such as sufficient time with patients, ability to hospitalize, ability to order tests and procedures, and ability to make referrals. These effects were generally reinforced by practicing in an area with a high level of HMO penetration and were offset to some extent by having had exposure to HMOs and the practice of cost-effective medicine while in medical training. CONCLUSIONS: Although financial incentives to reduce services are not widespread, there is a legitimate reason to be concerned about possible adverse affects on the quality of care. More research is needed to investigate directly whether changes in patients' health are affected by their physicians' financial incentives. (+info)