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Disclosure of Physicians' Compensation Model and Financial Incentives

Armen Hareyan's picture

Physicians' financial incentives

Providing notices that explain how physicians are paid appears to increase patients' knowledge about compensation models, does not harm trust and may increase the loyalty patients feel toward their physicians, according to a study in the March 27 issue of the Archives of Internal Medicine, one of the JAMA/Archives journals.

During the 1990s and continuing today, the public and the media focused heavily on the ethics of physician compensation plans such as capitation, in which physicians receive a lump sum for each patient they manage, according to background information in the article. "Commentaries by physicians, media reports, editorial cartoons and even popular movies raised alarms that these new physician payment methods were creating hazardous conflicts of interest that would keep physicians from recommending expensive, but necessary, care," the authors write. "This increasing suspicion about financial incentives spawned individual and class action lawsuits, and was a prominent part of the managed care 'backlash'." Some have suggested financial disclosures as a solution, but opponents worry that sharing such information with patients could undermine trust without helping them make decisions about their health care.

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Steven D. Pearson, M.Sc., M.D., Harvard Medical School and Harvard Pilgrim Health Care, Boston, and colleagues studied the effects of such disclosures at two group practices, one in Boston (5,000 patients) and one in Los Angeles (3,000 patients). The chief medical officer of each physician group drafted a letter explaining the basic model by which physicians in the group were compensated-mentioning, for instance, that the group receives money from many health insurers, which is pooled and then distributed to physicians as monthly or bimonthly salaries based on a number of factors. Patients at the two group practices were randomized and half were sent a disclosure letter. About eight to 12 weeks later, all the patients were mailed a survey that included questions about health status and demographics, knowledge of the model by which their physicians were paid, and patients' trust and loyalty in their physicians.

In Boston, 1,138 of the 2,352 patients who had received a disclosure statement and 1,277 of the 2,398 patients who did not receive a statement responded to the survey; in Los Angeles, responses were received from 533 of 1,449 patients who had received disclosure statements and from 549 of 1,421 who had not. In both cities, patients who had received a disclosure were more likely to correctly identify the model by which their physicians were paid-45.1 percent vs. 27.1 percent in Boston and 37 percent vs. 23.6 percent in Los Angeles. These rates were even higher among patients who were mailed a disclosure and remembered receiving it (56.9 percent in Boston and 48.4 percent in Los Angeles). Patients who received a disclosure were also more likely to report that they knew enough about their physician's payment model to judge its possible influence on their health care (32.5 percent vs. 17.8 percent in Boston, 31.8 percent vs. 26.4 percent in Los Angeles).

Overall, patients receiving a disclosure did not experience a significant change in levels of trust in their physicians. But among patients who remembered receiving a disclosure, 21.4 percent in Boston and 24.4 percent in Los Angeles responded that it had increased their trust either greatly or somewhat, less than 5 percent of patients in either city reported that it decreased their trust somewhat, and none said that it decreased their trust greatly. Loyalty to the physician group, measured by asking patients whether they would be unlikely to switch medical groups in the next couple of years, was higher among patients who received a disclosure and was significantly higher in the disclosure group in Boston (73.4 percent vs. 70.2 percent).

Based on the findings in the study, it appears likely that many patients still have incorrect assumptions about how their physicians are paid, the authors write. "Further creative efforts are, therefore, needed, to improve patients' understanding of the existence, or lack, of significant financial conflicts of interest in their health care relationships," they conclude. "Disclosure is likely to fill an important role in this effort. This study suggests that regulators, policy makers and physician groups themselves should renew their consideration of disclosure as an instrument to advance the best interests of patients and physicians." (Arch Intern Med. 2006;166:623-628)