Changing remuneration systems: effects on activity in general practice. Physician reimbursement by salary or fee-for-service: effect on physician practice behavior in a randomized prospective study. Prepayment with office-based physicians in publicly funded programs: results from the Children's Medicaid Program. Do physician-payment mechanisms affect hospital utilization? A study of Health Service Organizations in Ontario.
To investigate the effects on general practitioners' activities of a change in their remuneration from a capitation based system to a mixed fee per item and capitation based system.
                Follow up study with data collected from contact sheets completed by general practitioners in one period before (March 1987) a change in their remuneration system and two periods after (March 1988, November 1988), with a control group of general practitioners with a mixed fee per item and capitation based system throughout.
                General practices in Copenhagen city (index group) and Copenhagen county (control group).
                265 General practitioners in Copenhagen city, of whom 100 were selected randomly from the 130 who agreed to participate (10 exclusions) and 326 general practitioners in Copenhagen county.
                Number of consultations (face to face and by telephone) and renewals of prescriptions, diagnostic and curative services, and specialist and hospital referrals per 1000 enlisted patients in one week.
                Of the 75 general practitioners who completed all three sheets, four were excluded for incomplete data. Total contact rates per 1000 patients listed rose significantly compared with the rates before the change index in the city (100.0 before the change v 111.7 (95% confidence interval 106.4 to 117.4 after the change) and over the same time in the control group (100.0 v 106.0), but within a year these rates fell (to 104.2(99.1 to 109.6) and 104.0 respectively). There was an increase in consultations by telephone initially but not thereafter. Rates of examinations and treatments that attracted specific additional remuneration after the change rose significantly compared with those before (diagnostic services, 138.1 (118.7 to 160.5) and 159.5 (137.8 to 184.7) and curative services 194.6 (152.2 to 248.9) and 194.8(152.3 to 249.2) for second and third data collections respectively) and with the control group (diagnostic services 105.3, 107.6 and curative services 106.0, 115.0) whereas referral rates to secondary care fell (specialist referrals 90.1 (80.7 to 100.6) and 77.0 (68.6 to 86.4) and hospital referrals 87.4 (71.1 to 107.5) and 68.4 (54.7 to 85.4] in doctors in the city.
                Introducing a partial fee for service system seemed to stimulate the provision of services by general practitioners, resulting in reduced referral rates. The concept of a "target income" which doctors aim at, rather than maximising their income seemed to play a part in adjustment to changing the system of remuneration. We used a resident continuity clinic to compare prospectively the impact of salary v fee-for-service reimbursement on physician practice behavior. This model allowed randomization of physicians into salary and fee-for-service groups and separation of the effects of reimbursement from patient behavior. Physicians reimbursed by fee-for-services scheduled more visits per patient than did salaried physicians (3.69 visits v 2.83 visits, P less than .01) and saw their patients more often (2.70 visits v 2.21 visits, P less than .05) during the 9-month study. Almost all of this difference was because fee-for-service physicians saw more well patients than salaried physicians (1.42 visits and .99 visits per enrolled patient, respectively, P less than .01). Evaluating visits by American Academy of Pediatrics' guidelines indicated that fee-for-service physicians saw more patients for well-childcare than salaried physicians because they missed fewer recommended visits and scheduled visits in excess of those recommendations. Fee-for-service physicians also provided better continuity of care than salaried physicians by attending a larger percentage of all visits made by their patients (86.6% of visits v 78.3% of visits, P less than .05), and by encouraging fewer emergency visits per enrolled patient (0.12 visits v 0.22 visits, P less than .01). Physicians' interest in private practice, as determined by their career plans, correlated significantly with total number of patients enrolled (r = .48, P less than .05) and total clinic patients seen by each resident during the study (r = .40, P less than .05).(ABSTRACT TRUNCATED AT 250 WORDS) This paper is a report of the results of a demonstration designed to provide empirical evidence regarding the effects of alternative approaches to paying physicians for serving children in the Medicaid program: (1) visit fees set at twice regular Medicaid fees in return for physician agreement to manage utilization and (2) capitation and financial risk-sharing along with the same physician agreement to manage utilization. Participating physicians were assigned randomly to either of the two payment groups. Comparisons of utilization and expenditures were made between these two plans and the regular Medicaid program (fee-for-service, low fees). Results showed no adverse effect of capitation payments on primary care visits to office-based physicians. Capitation physician referrals to specialists decreased relative to all other groups studied, consistent with the theory that the financial incentives in capitation will lead primary care physicians to reduce referrals to specialists. To determine whether payment of primary care physicians based on capitation, with an additional incentive payment for low hospital-utilization rates, resulted in lower hospital-utilization rates among patients of these physicians than among patients of physicians still paid on a fee-for-service basis.
                Retrospective cohort study.
                Capitation-based and fee-for-service primary care practices in Ontario.
                Thirty-nine physicians whose method of payment was converted from fee-for-service to capitation during the period from June 1985 to January 1989 and 7 physicians who remained in fee-for-service practice, two of whom were matched with one physician in capitation-based practice on the basis of practice location, type of practice (academic v. community), hours of practice (part-time v. full-time), years since graduation, physician group size, practice size (number of patients), type of group (primary care v. multispecialty), sex, certification in family medicine, country of graduation (Canada v. other) and age. One physician in capitation-based practice was matched with only one physician in fee-for-service practice.
                Annual hospital-utilization rates (hospital separations or hospital days per 1000 patients in each practice) for the physicians paid on a capitation basis 3 years before, 1 year before and 3 years after they converted from fee-for-service payment and at corresponding periods for the matched physicians still paid on a fee-for-service basis.
                The mean annual rate of hospital days used, adjusted for the age and sex of patients as well as for their social-program-recipient status, fell from 1085 per 1000 patients (3 years before the conversion date) to 1030 (1 year before conversion) and to 954 (3 years after conversion) in capitation-based practices. For the matched physicians in fee-for-service practice, the rates during the corresponding periods were 1085, 1035 and 956 hospital days per 1000 patients. The pattern was similar for rates of hospital separations, adjusted for patient's age, sex and social-program-recipient status. There were no statistically significant differences between the rates of hospital utilization among patients of physicians in capitation-based practices and the rates among those of physicians in fee-for-service practices during each of the three periods, nor were there significant differences in the changes in rates.
                Capitation payment, with an additional incentive payment to encourage low hospital-utilization rates, did not reduce hospital use. Factors other than the method of physician payment appear to be responsible for the variations in hospital utilization among practices.
It is noteworthy that so few studies met the inclusion criteria. There is some evidence to suggest that the method of payment of primary care physicians affects their behaviour, but the findings' generalisability is unknown. More evaluations of the effect of payment systems on PCP behaviour are needed, especially in terms of the relative impact of salary versus capitation payments.