The alignment and blending of payment incentives within physician organizations.
OBJECTIVE
To analyze the blend of retrospective (fee-for-service, productivity-based salary) and prospective (capitation, nonproductivity-based salary) methods for compensating individual physicians within medical groups and independent practice associations (IPAs) and the influence of managed care on the compensation blend used by these physician organizations.


METHODS
Of the 1,587 medical groups and IPAs with 20 or more physicians in the United States, 1,104 responded to a one-hour telephone survey, with 627 providing detailed information on physician payment methods.


METHODS
We calculated the distribution of compensation methods for primary care and specialty physicians, separately, in both medical groups and IPAs. Multivariate regression methods were used to analyze the influence of market and organizational factors on the payment method developed by physician organizations for individual physicians.


RESULTS
Within physician organizations, approximately one-quarter of physicians are paid on a purely retrospective (fee-for-service) basis, approximately one-quarter are paid on a purely prospective (capitation, nonproductivity-based salary) basis, and approximately one-half on blends of retrospective and prospective methods. Medical groups and IPAs in heavily penetrated managed care markets are significantly less likely to pay their individual physicians based on fee-for-service than are organizations in less heavily penetrated markets.


CONCLUSIONS
Physician organizations rely on a wide range of prospective, retrospective, and blended payment methods and seek to align the incentives faced by individual physicians with the market incentives faced by the physician organization.
Robinson
James C
JC
University of California, Berkeley, School of Public Health, 140 Warren, Berkeley, CA 94720-7360, USA.
Shortell
Stephen M
SM
Li
Rui
R
Casalino
Lawrence P
LP
Rundall
Thomas
T
D002204:Capitation Fee / Q000706:statistics & numerical data*; D003625:Data Collection; D004470:Economics, Medical; D018588:Fee-for-Service Plans / Q000706:statistics & numerical data*; D006123:Group Practice / Q000191:economics*; D019981:Health Care Sector; D006279:Health Maintenance Organizations; D006291:Health Policy; D006280:Health Workforce; D006801:Humans; D007193:Independent Practice Associations / Q000191:economics; D010816:Physician Incentive Plans / Q000191:economics*; D011320:Primary Health Care / Q000191:economics; D011445:Prospective Payment System; D012051:Reimbursement Mechanisms; D013038:Specialization; D014481:United States