Inside Medicine: How's your doctor paid? It pays to know

12/20/2012 12:00 AM

12/19/2012 12:53 PM

Like it or not, in the United States, the practice of medicine is driven by different incentives – to get people better, to improve the quality of people's lives, and of course to make money.

For the most part, there are four basic models to pay doctors.

None of these payment systems is perfect, and each can lead to some pretty odd behaviors when care is driven by these financial incentives. It is important to understand the incentives that may be driving your doctor's behaviors so you can ask clarifying questions to make sure you are getting the care you need.

Take for example the model in which a doctor works independently and charges the patient or an insurance company for everything they do. Financial incentives in this model would lead doctors to perform unnecessary treatments for which they charge more money. This so-called fee-for-service health care is driven by what doctors and patients want, not what they need or what has been proved effective. The result is inefficient, wasteful and dangerous care.

The second model is the one in which doctors work for an employer – say a managed-care organization or a government. Doctors are paid a salary regardless of how many patients they see or the quality of care they provide. In this case, the incentive is to offer as little care as possible to as few people as possible. The less they do, the easier their job.

The third model is one in which a doctor is paid a set fee each month for every patient in their practice. This payment method is called capitation. The doctor receives a monthly fee whether or not the patient sees the doctor.

A healthy young person is a gem. They come in rarely, or not at all. On the other hand, a person with chronic illnesses, say diabetes, emphysema and depression, comes in regularly. For each of these patients the doctor receives the same monthly income. So, in this case the incentive is to do as little as possible for as many people as possible to drive up salary.

The last model is all the rage these days and is called pay-for- performance. In this model a doctor is paid for delivering scientifically proven (evidence-based) quality care around certain conditions. So, when treating a person with diabetes they might be paid more if they check the person's blood sugar, measure their blood pressure and check their cholesterol. For women's health, the doctor might get top dollar if he discusses domestic violence, talks over advantages and disadvantages of screening mammograms and checks to make sure immunizations are up to date.

If the doctor does not do these checklist items, he or she gets a smaller amount of money. In this case the incentive is to do all the items on the checklist but no more, since other items are not valued by the health plan and only take time. The incentives risk decreasing a doctor's motivation and encouraging them to game the system.

None of these payment schemes is perfect, but it is in your best interest to know how your doctor is reimbursed so you can keep your eyes open for incentives that may not be in your best interest.

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