This review examines the relationship between the financial incentives confronting physicians in managed care plans and the utilization of services. The primary conclusion of this review is that the financial incentives confronting physicians are a key element in explaining the lower utilization rates of enrollees in managed care plans. However, this conclusion is not definitive because it is based on studies that are subject to numerous sources of potential bias. To isolate the impact of financial incentives facing physicians on the performance of health plans, it is necessary to adjustor patient, physician, health plan, and market characteristics related to utilization, and most studies include little information about these characteristics.
Get full access to this article
View all access options for this article.
References
1.
Appleby, C.1995. The measure of medical services. Hospital & Health Networks69 June 20): 26-34.
2.
Clancy, C. M. , and B. E. Hillner. 1989. Physicians as gatekeepers: The impact of financial incentives. Archives of Internal Medicine149 (April): 917-920.
3.
Chemew, M.1995. HMO use of diagnostic tests: A review of the evidence. Medical Care Research and Review52 (June): 196-222.
4.
Christensen, S.1992. Volume response to exogenous changes in Medicare's payment policies. Health Services Research27:65-79.
5.
Epstein, A. M. , C. B. Begg, and B. J. McNeil. 1986. The use of ambulatory testing in prepaid and fee-for-service group practices: Relation to perceived profitability. The New England Journal of Medicine314 (April 24): 1089-1094.
6.
Garnick, D. W. , H. S. Luft, L. B. Gardner, E. M. Morrison, M. Barrett, A. O'Neil, and B. Harvey. 1990. Services and charges by PPO physicians for PPO and indemnity patients: An episode of care comparison. Medical Care28 (October): 894-906.
7.
Gold, M. , R. Hurley, T. Lake, T. Ensor, and R. Berenson. 1995. Arrangements between managed care plans and physicians: Results from a 1994 survey of managed care plans. Washington, DC: Physicians Payment Review Commission, February.
8.
Gold, M. , L. Nelson, T. Lake, R. Hurley, and R. Berenson. 1995. Behind the curve: A critical assessment of how little is known about arrangements between managed care plans and physicians. Medical Care Research and Review52 (September): 307-341.
9.
Greene, J. , and S. Lutz. 1995. Hospital chains—A down year at not-for-profits; for-profits soar. Modern Healthcare25 (May 22): 43-62.
10.
Greenfield, S. , E. C. Nelson, M. Zubkoff, W. Manning, W. Rogers, R. L. Kravitz, A. Keller, A. R. Tarlov, and J. E. Ware. 1992. Variations in resource utilization among medical specialties and systems of care: Results from the medical outcomes study. Journal of the American Medical Association267 (March 25): 1624-1630.
11.
Health News Daily. 1995. Half of U.S. physicians are associated with risk insurance plans, November 13, p. 4.
12.
Hellinger, F. J.1995. Selection bias in HMOs and PPOs: A review of the evidence. Inquiry32 (Summer): 135-142.
13.
Hickson, G. H. , W. A. Altemeier, and J. M. Perrin. 1987. Physician reimbursement by salary or fee-for-service: Effect on physician practice behavior in a randomized prospective study. Pediatrics, 80:344-350.
14.
Hillman, A. L. , M. V. Pauly, and J. J. Kerstein. 1989. How do financial incentives affect physicians' clinical decisions and the financial performance of health maintenance organizations. New England Journal of Medicine321 (July 13): 86-92.
15.
Hlatky, M. A. , K. L. Lee, E. H. Botvinick, and B. H. Brundage. 1993. Diagnostic test use in different practice settings: A controlled comparison. Archives of Internal Medicine143 (October): 1886-1889.
16.
Holohan, J. , A. Dor, and S. Zuckerman. 1990. Understanding the recent growth in Medicare physician expenditures. Journal of the American Medical Association263:1658-1661.
17.
Lessler, D. S. , and A. L. Avins. 1992. Cost, uncertainty, and doctors' decisions: The case of thrombolytic therapy. Archives of Internal Medicine152 (August): 1665-1672.
18.
Manning, W. F. , A. Leibowitz, G. A. Goldberg, W. H. Rogers, and J. P. Rogers. 1984. A controlled trial of the effects of a prepaid group practice on use of services. New England Journal of Medicine310 (June 7): 1505-1510.
19.
Martin, D. P. , P. Diehr, K. F. Price, and W. C. Richardson. 1989. Effect of a gatekeeper plan on health services use and charges: A randomized trial. American Journal of Public Health79 (December): 1628-1632.
20.
Miller, R. , and H. S. Luft. 1994. Managed care plan performance since 1980. Journal of the American Medical Association271 (May 18): 1512-1519.
21.
Mitchell, J. , G. Wedig, and J. Cromwell. 1991. Physician response to fee changes with multiple payers. Journal of Health Economics10:385-410.
22.
Murray J. P. , S. Greenfield, S. H. Kaplan, and E. M. Yano. 1992. Ambulatory testing for capitation and fee-for-service patients in the same practice setting: Relationships to outcomes. Medical Care30 (March): 252-261.
23.
Perkoff, G. T. , L. Kahn, and P. J. Haas. 1976. The effects of an experimental prepaid group practice on medical care utilization and cost. Medical Care14 (May): 432-449.
24.
Perkoff, G. T. , L. Kahn, and A. Mackie. 1974. Medical care utilization in an experimental prepaid group practice model in a university medical center. Medical Care12 (June): 471-485.
25.
Rapoport, J. , S. Gehlbach, S. Lemeshow, and D. Teres. 1992. Resource utilization among intensive care patients: Managed care vs. traditional insurance. Archives of Internal Medicine152 (November): 2207-2212.
26.
Rice, T.1983. The impact of changing Medicare reimbursement rates on physician-induced demand. Medical Care21:803-815.
27.
Rice, T. and N. McCall. 1982. Changes in Medicare reimbursement in Colorado: Impact on physicians' economic behavior. Health Care Financing Review3:67-86.
28.
Sexton, C. J. , D. Morrill, and M. Matheny. 1995. Case study: Columbia/HCA in Florida. Health System Leader2 (April): 14-20.
29.
Sui, A. L. , A. Leibowitz, R. H. Brook, N. S. Goldman, N. Lurie, and J. P. Newhouse. 1988. Use of the hospital in a randomized trial of prepaid care. Journal of the American Medical Association259 (March 4): 1343-1346.
30.
U.S. Congress. General Accounting Office . 1993. Managed health care: Effect on employers' costs difficult to measure. Washington, DC: U.S. Government Printing Office, GAO/HRD-94-3.
31.
Welch, W. P. , A. L. Hillman, and M. V. Pauly. 1990. Toward new typologies for HMOs. Milbank Quarterly, 68 (2): 221-230.
