In spite of extensive debate concerning disclosure of financial incentives, little is known about patients' awareness of how their physicians are paid.25
This may be due in part to the difficulty of compiling such information. When intermediaries such as medical groups modify financial incentives from payors,28
data about how practicing physicians are paid when providing care to individual patients are not readily available. For example, a salaried physician may have been part of group that was paid on a capitated basis. Further, at the practice level, physicians may be paid through a variety of financial arrangements for different groups of patients (e.g., capitation, managed fee-for-service, and non-managed fee-for-service). We evaluated financial incentives at the individual physician level for each patient in the study.
Patients of salaried physicians were least likely to say they did not know how their doctor was paid and twice as likely as patients of capitated physicians to correctly identify their physician's payment method. Capitated patients were least likely to correctly identify their physician's payment method. Fee-for-service patients were most likely to correctly identify the payment method of their physician. This could be because fee-for-service patients are better educated and/or more aware of payment methods. Alternatively, it could be that fee-for-service patients were more likely to be right simply because all types of patients were most likely to guess fee-for-service and patients of physicians paid fee-for-service for their care were more likely to be correct.
Despite this significant knowledge gap, only about half of the patients wanted to be informed about their physician's payment method. Patients who stated they did not know how their physician was paid were no more likely to prefer disclosure than other patients. College graduates were most likely to want to know how their physician was paid.
In light of growing public concern about changes in the health care system,29–31
we had expected that the overall interest in disclosure would be higher, especially among patients who regularly use health care services. The low interest may be partly explained by the finding that most patients trust their physicians to act in their best interest regardless of patient perceptions of their physician's payment method.26
In addition, the implications of financial incentives on care may not be of concern to patients until serious illness strikes or until expensive procedures and interventions are under consideration. Very few patients think that fee-for-service payment, a traditionally common form of payment that may encourage overuse of medical services,32
has an adverse impact on the quality of care.25
Patients may be more concerned about premium costs and covered benefits21
than information about physician payment methods.
Given varied patient interest in physician payment information, current Health Care Financing Administration (HCFA) regulations concerning disclosure14
could lead to more vulnerable populations being less informed about such issues because they might be less likely to request such information. Some have argued that the doctrine of informed consent should encompass information about financial incentives that might affect clinical decision making.33,34
Advocates of this broader conceptualization argue that information about financial incentives is as relevant to informed consent as information concerning the risks and benefits of medical tests and procedures. Some would argue that fairness may be undermined if primarily well-educated, commercially insured patients get information about how physicians are paid, which is possible if the information is disclosed only to patients who request it.
We found that a majority of patients believed that using a bonus or withhold designed to limit use of services would have a negative impact on the quality of their care. Patients who were 35 to 54 years old were significantly more likely to view these types of bonuses and withholds negatively, compared to younger patients. White, college-educated, and more affluent patients tended to have a negative evaluation of these bonuses and withholds. They may view such incentives as restricting their access to needed but expensive medical services. Among patients who believed that these bonuses might adversely reduce use of medical services, many stated a willingness to pay a higher co-payment or deductible in order to get the tests that they considered necessary. This study did not address bonuses and withholds designed to increase utilization of appropriate services and decrease utilization of inappropriate services.
Given such strong attitudes towards certain incentives, effective use of physician payment information requires that patients have an educated basis for interpreting such information. Better-informed patients may conclude that incentive arrangements based on factors such as patient satisfaction or appropriate utilization of preventive services can control costs while improving quality of care. Patients who have choice of health plans may prefer to enroll in plans that use such incentives. At the same time, patients could avoid plans that use incentive arrangements that place physicians at high financial risk.35
Patients with employment-based insurance coverage often have few health plan choices.36,37
Nevertheless, disclosure may discourage the overall use of financial incentives that patients view as being incompatible with quality care, and thereby even patients who have no choice of plans may indirectly benefit from disclosure.
Despite the knowledge gap regarding how physicians are paid, little is known about how to inform patients about these complex financial issues. For example, patients may be more concerned about incentives that limit access to care, but may not appreciate that financial incentives that encourage overuse of medical services might negatively affect quality of care. Therefore, prior to widespread adoption and implementation of disclosure regulations, research is needed to evaluate ways of educating patients about different physician payment methods.20
Our study had several limitations. Results may not generalize to other health insurance plans or other cities. However, the study sites represented diverse medical care markets: Baltimore has high HMO market penetration, while Atlanta has relatively low penetration. Some patients who correctly identified how their physicians were paid may have simply guessed correctly. Therefore, the fraction of patients that actually knew how their physicians were paid is probably lower than our data suggest. The questions asking patients how their physician is paid necessarily simplified the many complexities of physician payment. For example, fee-for-service payments are usually based on the type of visit as well as particular procedures performed or services provided. To make the question understandable to most patients, we simply characterized fee-for-service payments as the doctor being paid based on the number of office visits. Similar simplifications were made when describing capitation and salary payment methods. Financial incentives such as bonuses and withholds can be based on a variety of factors, such as member satisfaction, provision of preventive services, group financial performance, compliance with nationally recognized clinical practice guidelines, and referral patterns. Because our study did not address these, our findings should not be generalized to them. In this study, we addressed only the type of bonus many people would consider to be the most negative, one that does not distinguish between appropriate and inappropriate uses of medical services. It is unknown to what extent this type of bonus has actually been used by insurers. Furthermore, we did not include any questions to assess patients' awareness of the risks of traditional indemnity arrangements.38
In addition, the wording of some of the questions (e.g., “Would you pay more for tests you thought you needed?”) may have influenced patients' responses. Finally, observed differences among patient groups may partly reflect selection bias. We statistically adjusted for measured differences in the patient groups, but there may be unmeasured differences as well.
Demand for disclosure is likely to increase as public concern about changes in the health care system grows. It also seems inevitable that patients increasingly will expect physicians to discuss issues of financial incentives, especially when such matters become relevant to care.39
Given current attitudes and lack of knowledge about physician payment methods, increased patient education about the appropriate role of financial incentives in medicine appears warranted. Only about half of the patients in this study wanted to be informed about how their physician was paid, but interest in payment method might increase as patients become more aware of the variations in physician payment strategies and the potential implications of those strategies.