Health Care Costs and Financing

Patients often do not understand information about the financial incentives offered to physicians by insurers

Federal and State governments now require health plans to disclose physician financial incentives. However, many patients do not know about their physicians' financial incentives and do not understand their implications, according to a study supported by the Agency for Healthcare Research and Quality (HS09810). For example, many focus group participants did not understand that capitated payments (a limited reimbursement to the doctor for individual patients, despite services rendered) were an incentive to doctors that could limit the tests, referrals, and/or procedures provided to a patient.

Disclosure practices must take into account the lack of understanding patients have of physician incentives, conclude study authors Tracy E. Miller, J.D., and Carol R. Horowitz, M.D., M.P.H., of the Mount Sinai School of Medicine. They conducted five focus groups (two Medicare, two non-Medicare, and one mixed Medicare and non-Medicare) and postgroup surveys of 29 focus group participants in New York City. The patients were introduced to three types of reimbursement: traditional fee-for-service (FFS), where a fee is provided for each service rendered; capitation, which involves a fixed monthly payment for health care services; and a fixed physician annual salary regardless of visits, tests, and procedures provided. Despite presenting physician incentives in the most basic terms to participants, almost one-third of them could not correctly identify the definitions of FFS or capitation in the survey administered immediately afterwards.

Participants also revealed significant barriers to learning about physician financial incentives. These ranged from high trust levels in primary care doctors and reluctance to think about the patient-physician relationship in financial terms to lack of understanding about how the incentives might relate to their own access to care and treatment. However, the possibility that incentives could influence decisions about hospitalization or major treatments sparked more interest in learning about physician incentives. The authors conclude that education about physician financial incentives must take into account the fact that the topic is new to most patients and unwelcome to some.

See "Disclosing physician financial incentives: Will consumers understand and value the information?" by Drs. Miller and Horowitz, in the July/August 2000 Health Affairs 19, pp. 149-155.

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