What if your lawyer got paid more if you received a smaller settlement? Or your mechanic reaped a bonus for withholding service on your car?

In an effort to contain health-care costs, many managed-care companies reward doctors who restrict medical care. Such financial incentives should be disclosed to patients and consumer groups, says Thomas H. Gallagher, M.D., in a recent issue of the American Journal of Medicine.

"Disclosure might lead plans to be more cautious in the types of incentives they adopt," says Gallagher, a primary care physician and instructor in medicine at Washington University School of Medicine in St. Louis. "And it might make patients scrutinize their doctors' recommendations more closely. In theory, it also could allow market forces to protect patients."

Financial incentives have long been part of medicine. The fee-for-service system encouraged doctors to provide more health-care services, some of which may have been unnecessary. Managed-care plans hope that providing physicians with new types of financial incentives will encourage doctors to be more cost-conscious in the medical care they provide, ordering only those services that are medically necessary.

The new incentives come in a number of different forms. Some plans give doctors a year-end bonus if they haven't referred too many patients for specialty care or laboratory tests. Others withhold a certain percentage of salary if cost-containment goals are not met. Many plans also capitate services, paying doctors a set amount per patient regardless of the number of visits. And these incentives often are combined -- a doctor may be promised $24 per patient per month, for instance, but receive only $16 per patient if the cost of referrals exceeds a certain amount.

Financial incentives could have two adverse effects, Gallagher points out. "If doctors withhold care that is really needed, patients' health care could suffer," he says. "But even if incentives do not affect p
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Contact: Linda Sage
sage@medicine.wustl.edu
314-286-0119
Washington University in St. Louis
27-Jan-1999