Where Fee-For-Service Works Best
This is from a study by Helmchen and Lo Sasso via Austin Frakt:
Using a four-year [2003-2006] sample of 59 physicians and 1.1 million encounters, we study how physicians at a network of primary care clinics responded when their salaried compensation plan was replaced with a lower salary plus substantial piece rates for encounters and select procedures. Although patient characteristics remained unchanged, physicians increased encounters by 11 to 61%, both by increasing encounters per day and days worked at the network, and increased procedures to the maximum reimbursable level.
The extra payment that so dramatically increased encounters was $5 for each reported performance of an eligible procedure.
So fee-for-service payment leads to an overprovision and hither costs? Not necessarily.
[T]he network began paying physicians $5 for…immunizations for children and adults as well as counseling and screening services aimed at detecting or preventing risk behaviors such as substance abuse, contraction of infectious disease, suicide, obesity, and the patient’s exposure to violence.
Frakt comments:
It is not at all obvious that the extra money spent encouraging these particular procedures was not worth the personal and population health value they conferred.
This is an interesting twist on the whole issue. If fee-for-service isn’t wrking for you, why not?
It gives a whole new meaning to the idea that you get what you pay for.
It is not at all surprising that physicians respond to incentives. Reducing base pay and creating a fee-for-service compensation system should spur doctors to perform the procedures that reward them.