Physician responses to fee-for-service and capitation payment.
The ability to achieve reductions in health care costs is determined in part by physician payment mechanisms. This study observes the response to a change in the reimbursement mechanism by a group of physicians who participated in a fee-for-service plan and then formed an IPA using capitation payment for primary care physicians and a reduced fee schedule for specialists. Patient benefits were similar under the two plans. Analyses of data for a group of continuous enrollees show that the change in the physician payment mechanism was associated with a reduction in hospitalizations but increases in length of hospital stay and number of ambulatory visits. These increases may have occurred because capitation for primary care physicians and a reduced fee schedule for specialists led to a greater number of referrals with no incentive in place for reductions in length of stay for specialty admissions.
Stearns
S C
SC
Department of Health Policy and Administration, University of North Carolina-Chapel Hill 27599.
Wolfe
B L
BL
Kindig
D A
DA
D000553:Ambulatory Care / Q000191:economics / Q000706:statistics & numerical data; D002204:Capitation Fee; D005251:Fees, Medical; D006279:Health Maintenance Organizations / Q000191:economics / Q000706:statistics & numerical data; D006302:Health Services Research; D006760:Hospitalization / Q000706:statistics & numerical data; D007902:Length of Stay / Q000191:economics / Q000706:statistics & numerical data; D010820:Physicians / Q000191:economics*; D012017:Referral and Consultation / Q000191:economics; D012044:Regression Analysis; D012051:Reimbursement Mechanisms; D014922:Wisconsin