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Resolving disagreements in the patient-physician relationship: tools for improving communication in managed care.

Managed care uses financial incentives and restrictions on tests and procedures to attempt to influence physician decision making and limit costs. Increasingly, the public is questioning whether physicians are truly making decisions based on the patient's best interest or are unduly influenced by economic incentives. These circumstances lead to the potential for disagreements and conflict in the patient-physician relationship. We convened a group of individuals in October 1998, including patient representatives, leaders from health care organizations, practicing physicians, communication experts, and medical ethicists, to articulate the types of disagreements emerging in the patient-physician relationship as a result of managed care. We addressed 3 specific scenarios physicians may encounter, including allocation, illustrated by a patient who is referred to a different ophthalmologist based on a new arrangement in the physician's group; access, illustrated by a patient who wishes to see his own physician for a same-day visit rather than a nurse specialist; and financial incentives, illustrated by a patient who expects to have a test performed and a physician who does not believe the test is necessary but is afraid the patient will think the physician is not ordering the test because of financial incentives. Using these scenarios, we suggest communication strategies that physicians can use to decrease the potential for disagreements. In addition, we propose strategies that health plans or physician groups can use to alleviate or resolve these disagreements.

Communication↗

Effects of compensation method on physician behaviors.

OBJECTIVE: To examine physician and leader perceptions of the relationship between physician compensation and the productivity of physicians practicing in medical groups. STUDY DESIGN: Key informant interviews identified subjects' perceptions of factors influencing physician productivity and the behavioral effects of individual financial incentives. Interview transcripts were analyzed by a team of physicians, economists, and other researchers. STUDY POPULATION: Physicians, medical leaders, and group practice administrators (n = 114) representing 46 medical group practices in California, Oregon, Washington, and Wisconsin were interviewed. RESULTS: Five major themes emerged: (1) Most physicians reported that financial incentives did not substantially affect their own behavior, except for productivity. However, they suggested that specific compensation models do lead to certain seemingly undesirable physician behaviors. (2) By contrast, medical group leaders reported that financial incentives do affect a variety of physician behaviors. (3) Four productivity drivers emerged: financial incentives, demand-side factors, systems and infrastructure, and other individual or group attributes. (4) Physician compensation systems are evolving toward a blend of production-based and production-neutral incentives, plus new metrics aligned with the demands of managed care. (5) Culture, size, and specialty mix are significant determinants of group physician compensation systems. CONCLUSIONS: Compensation method is perceived to be a significant influence on physician productivity, particularly among group practice leaders. The changing context of medical practice represents another powerful "macro" lever on physician behavior.

Attitude of Health Personnel↗

Straight talk--new approaches in healthcare. Want better relationships with payors? Focus on medical management.

When it comes to managing medical care for their enrollees, payors are moving towards a broader focus for medical management that includes both costs and quality. In the twelfth installment of Straight Talk, we look at how health plans, such as CIGNA, are developing incentives to reward high-quality, low-cost providers of medical care and transitioning their utilization management operations to a new model. To ensure quality, they are beginning to compare providers' performance to national standards for medical outcomes. Through these initiatives, known as "medical management," payors hope to improve not only medical care but also their relationships with providers.

Case Management↗

The proposed market for human organs.

During the last decade there have been enormous advances in the transplantation of vital human organs--in particular, the kidney, lung, heart, liver, pancreas, and small intestine. Unfortunately, efforts to provide the benefits of these operations to patients have been severely hindered by limitations in the supply of organs--limitations that are a consequence of regulation prohibiting the use of market incentives to increase the supply. Markets for organs could take various forms: sales by living donors; sales of future interests in organs, to be removed on the death of the donor; and sales of organs of a recently deceased person by the family of the deceased. Two additional issues relate to the design of a market: the geographic scope of the market and rules of liability for the sale of diseased or defective organs.

Health Care Rationing↗

Designing a funding system for rehabilitation services. Part 2: Policy objectives and options for achieving efficiency and quality of care.

This paper examines the objectives of a funding policy for rehabilitation services. A casemix funding system comprises two sets of instruments: a classification system and a payment system. Attention is given to identifying which policy objectives are best pursued through each of these instruments. The paper then analyses the effect of various instruments on creating incentives for efficiency and quality, and assesses policy options with regard to their capacity for dealing with the heterogeneity of rehabilitation patients and controlling various forms of gaming. In conclusion, the paper canvasses four major areas warranting consideration in advancing policy: the use of a blended payment system; dealing with functional gain; the development of an information base; and the focus on designated rehabilitation units.

Australia↗

Mandatory high-risk pooling: an approach to reducing incentives for cream skimming.

Risk-adjusted capitation payments (RACPs) to competing health insurers are an essential element of market-oriented health care reforms in The Netherlands. Crude RACPs are inadequate, especially because they encourage insurers to select against people expected to be unprofitable--a practice called cream skimming. However, implementing improved RACPs does not appear to be straightforward. This paper analyzes an approach that, given a system of crude RACPs, reduces insurers' incentives for cream skimming in the market for individual health insurance, while preserving incentives for efficiency and cost containment. Under the proposed system of Mandatory High-Risk Pooling (MHRP), each insurer would be allowed to periodically predetermine a small fraction of its members whose costs would be (partially) pooled. The pool would be financed with mandatory, flat-rate contributions. The results suggest that MHRP is a promising supplement to RACPs.

Capitation Fee↗

The effect of per-item fees on the behaviour of general practitioners.

The recent government White Paper 'Working for Patients' emphasised the use of financial incentives as a means of altering the behaviour of general practitioners (GPs) in the U.K. This paper examines the impact of financial incentives on GPs' behaviour with respect to maternity care and cervical cytology. Changes in per-item fees over the period 1966-89 appear to have had little effect on the numbers of treatments; rather service provision was related to patient demand and the availability of GPs. However, target payments for cervical cytology introduced in 1990 appear to have had a major impact.

Fees, Medical↗

The effect of hospital payment methods on the pattern and cost of mental health care.

The authors report on a study of the impact of a prospective payment method on hospital charges and mix of services provided to a group of Medicare patients treated for mental disorders in general acute care hospitals in Maryland. The study focused on per case reimbursement, under which hospitals are guaranteed a level of total revenue based on the number and case mix of discharges, and examined its effect on hospital charges during an index admission and on hospital and non-hospital charges over a three-month period following the index admission. The results suggest that per case reimbursement provides incentives to reduce the cost of one hospital stay, but this cost reduction is possibly offset by a higher readmission rate or by higher readmission charges. The authors conclude that the impact of the per case payment method on the total cost of mental health care over a specific period of time is insignificant, but that the payment method may influence the pattern of care.

Cost Control↗

Shifting ethics: debating the incentive question in organ transplantation.

The paper reviews the discussion within transplantation medicine about the organ supply and demand problem. The focus is on the evolution of attitudes toward compensation plans from the early 1980s to the present. A vehement rejection on ethical grounds of anything but uncompensated donation--once the professional norm--has slowly been replaced by an open debate of plans that offer financial rewards to persons willing to have their organs, or the organs of deceased kin, taken for transplantation. The paper asks how this shift has occurred and what it tells us about the dynamics of bioethical debates, both within professional circles and in wider public arenas.

Attitude to Health↗

Percentage compensation arrangements: suspect, but not illegal.

Percentage compensation arrangements, in which a service is outsourced to a contractor that is paid in accordance with the level of its performance, are widely used in many business sectors. The HHS Office of Inspector General (OIG) has shown concern that these arrangements in the healthcare industry may offer incentives for the performance of unnecessary services or cause false claims to be made to Federal healthcare programs in violation of the antikickback statute and the False Claims Act. Percentage compensation arrangements can work and need not run afoul of the law as long as the healthcare organization carefully oversees the arrangement and sets specific safeguards in place. These safeguards include screening contractors, carefully evaluating their compliance programs, and obligating them contractually to perform within the limits of the law.

Contract Services↗

Business ethics and health care: the re-emerging institution-patient relationship.

Managed care poses a challenge to the traditional conceptualization of medicine and of the physician-patient relationship. People have evaluated the merits of managed care by focusing upon the way its incentives alter the relationship between physician and patient. However, this misses the key to rightly evaluating MCOs. To address the ethics of MCOs one should focus on the institution-patient relationship, and this has not been sufficiently addressed in the literature. I will address this relationship here and show how the institution-patient relationship has evolved, why it has become increasingly prominent, and why we must move beyond business ethics for rightly understanding it.

Community-Institutional Relations↗

The death of managed care: a regulatory autopsy.

On the heels of widespread patient protection legislation in the states, the managed care industry abandoned or greatly scaled back the core elements of gate-keeping, utilization management, and financial incentives, which are the very targets of this legislation. This article explores whether, and to what extent, the industry's abrupt change in course can be attributed to these laws. Based on extensive interviews with key informants in six representative states, the article concludes that these laws were not the primary driver of changes in managed care practices. However, patient protection laws interacted with other social and market forces, through complex forms of feedback and reinforcement, to bring about more thoroughgoing change than would have otherwise occurred.

Gatekeeping↗

Cream-skimming, incentives for efficiency and payment system.

Reform proposals of health care systems in several countries have advocated variations of a risk adjustment/capitation system. These proposals face a serious objection: incentives to risk selection are prevalent in the system. By now, considerable literature has been devoted to finding ways of mitigating, if not eliminating, this problem, while at the same time preserving incentives to efficiency. We contribute to this debate presenting a transfer system that, under some circumstances, attains both provider efficiency and no risk selection. The transfer system extends typical linear payment systems. It can be interpreted as a fixed transfer in the beginning of the period plus an ex-post fund at the end of the period. The novelty rests in the way contributions to this fund are defined.

Capitation Fee↗

Medicaid: taking stock.

In the last few years, Medicaid has attracted more than casual attention, one reflection of which is the fact that JHPPL has published five papers on the program in its last few issues. This paper, a sixth, takes a broader view of the program than is typically the case. After a critique of the five recent articles, I discuss several questions raised by them and reach the following conclusions: First, the states do not invest enough in producing program data suitable for policy analysis and research. One lesson: Better data and analysis can help the states to avoid expensive mistakes. Second, those policy analyses that have been offered fail to give sufficient attention to the political dimension of policy. That is one reason why policy choices produce unexpected effects. Third, since Medicaid is a relatively small player in the vast medical care market, incentives adopted by Medicaid officials throughout the country rarely have the desired effects. Finally, as long as Medicaid remains the principal mechanism to provide access to health care for the poor, it must be made as efficient and effective as possible. Yet, for both political and economic reasons, Medicaid can never be what its original planners had hoped, the vehicle for providing the poor with reliable access to mainstream medical care.

Centers for Medicare and Medicaid Services, U.S.↗

Market incentives, plan choice, and price increases.

The Federal Employees Health Benefits Program (FEHBP) has attracted considerable interest for its ability to control health care costs. We examine the impact of the FEHBP's maximum dollar contribution on incentives to select low-cost plans and the growth in insurance premiums over time. Unless the maximum dollar contribution is pegged to a low-price plan, few enrollees select such plans. Moreover, premiums rise at least five percentage points per year faster among plans below this fixed subsidy level than they do in plans above it. Our results have important implications for the design of similar market-based approaches.

Choice Behavior↗

An analysis of Medicare's Incentive Payment program for physicians in health professional shortage areas.

CONTEXT: Medicare's Incentive Payment (MIP) program provides a 10% bonus payment to providers who treat Medicare patients in rural and urban areas where there is a shortage of generalist physicians. PURPOSE: To examine the experience of Alaska, Idaho, North Carolina, South Carolina, and Washington with the MIP program. We determined the program's utilization and which types of physicians received payments. METHODS: Retrospective cohort design, utilizing complete 1998 Medicare Part B data. Physician specialty was determined through American Medical Association data. Rural status was determined by linking the physician business ZIP code to its Rural-Urban Commuting Area code (RUCA). FINDINGS: There were 2,220,275 patients and 39,749 providers in the cohort, including 9,769 (24.6%) generalists, 21,331 (53.7%) specialists, and 8,649 (21.8%) nonphysician providers. Over $4 million in bonus payments (median payment = $173) were made to providers in HPSAs. Specialists and urban providers received 58% and 14% of the bonus reimbursements, respectively. Two million dollars in payments were not distributed because the providers did not claim them. Over $2.8 million in bonus claims were distributed to providers who likely did not work in approved HPSA sites. CONCLUSIONS: The MIP bonus payments given to providers are small. Many providers who should have claimed the bonus did not, and many providers who likely did not qualify for the bonus claimed and received it. Consideration should be given to focusing and enlarging the bonus payments to specific providers, rather than rewarding all providers equally. Policy makers should also consider a system that prospectively determines provider eligibility.

Alaska↗

The structure of economic incentives in the Robert Wood Johnson/HUD Program on Chronic Mental Illness 1988.

This paper describes the financial arrangements put into place by cities participating in the Robert Wood Johnson Foundation's Program on Chronic Mental Illness. Descriptive information is given on the level of expenditure, the mix of revenues, and the terms under which local, federal, and Medicaid dollars are allocated to local programs. Data are presented on the use of state hospitals and the number of severely mentally ill individuals in treatment. These data are used to make observations on the initial stages of the demonstration.

Chronic Disease↗

Physicians' ethical beliefs about cost-control arrangements.

BACKGROUND: Although much has been written about the ethics of new methods of health care financing, little is known about the extent to which physicians experience these cost-control arrangements as ethical problems. METHOD: A cross-sectional telephone survey of 1,549 physicians, 8 to 17 years after residency, randomly selected from 75 US metropolitan service areas (response rate, 74.0%). RESULTS: Only 17.0% believed that financial incentives to limit services are ethically acceptable. Although 52.9% thought that physicians should try to abide by guidelines discouraging the use of interventions with possible but unproven benefit, only 14.5% thought such guidelines should be enforced by payers. Only 5.7% thought that it was morally acceptable for payers to discourage physicians from telling patients about their personal financial incentives, and only 9.1% found compliance with such restrictions morally acceptable. Changes in the health care system in the past 5 years were believed to have had a negative impact on their own patients' trust in them by 50.6%, and 80.8% believed that changes in the health care system in the past decade have diminished physicians' commitment to an ethic of undivided loyalty to patients. In multiple regression analysis, physicians who reported that the overall personal financial incentives in their practices encouraged them to reduce services were significantly more likely to have ethical objections to such incentives, to believe their own patients' trust in them had diminished, and to believe that the ethic of undivided loyalty to patients had diminished. CONCLUSIONS: Many of the methods now commonly used to influence medical decision making are considered ethically objectionable by most midcareer physicians. Whether their ethical disquiet about these arrangements is justified cannot be answered from these data.

Attitude of Health Personnel↗