Stirring the pot: Switching from blended fee-for-service to blended capitation models of physician remuneration

Primary care payment models and avoidable hospitalizations in Ontario, Canada: A multivalued treatment effects analysis

Improving access to primary care physicians' services may help reduce hospitalizations due to Ambulatory Care Sensitive Conditions (ACSCs). Ontario, Canada's most populous province, introduced blended payment models for primary care physicians in the early- to mid-2000s to increase access to primary care, preventive care, and better chronic disease management. We study the impact of payment models on avoidable hospitalizations due to two incentivized ACSCs (diabetes and congestive heart failure) and two non-incentivized ACSCs (angina and asthma). The data for our study came from health administrative data on practicing primary care physicians in Ontario between 2006 and 2015. We employ a two-stage estimation strategy on a balanced panel of 3710 primary care physicians (1158 blended-fee-for-service (FFS), 1388 blended-capitation models, and 1164 interprofessional team-based practices). First, we account for the differences in physician practices using a generalized propensity score based on a multinomial logit regression model, corresponding to three primary care payment models. Second, we use fractional regression models to estimate the average treatment effects on the treated outcome (i.e., avoidable hospitalizations). The capitation-based model sometimes increases avoidable hospitalizations due to angina (by 7 per 100,000 patients) and congestive heart failure (40 per 100,000) relative to the blended-FFS-based model. Switching capitation physicians into interprofessional teams mitigates this effect, reducing avoidable hospitalizations from congestive heart failure by 30 per 100,000 patients and suggesting better access to primary care and chronic disease management in team-based practices.

Primary care services and emergency department visits in blended fee-for-service and blended capitation models: evidence from Ontario, Canada

INTRODUCTION

It is well-known that the way physicians are remunerated can affect delivery of health care services to the population. Fee-for-service (FFS) generally leads to oversupply of services, while capitation leads to undersupply of services. However, little evidence exists on the link between remuneration and emergency department (ED) visits. We fill this gap using two popular blended models introduced in Ontario, Canada: the Family Health Group (FHG), an enhanced/blended FFS model, and Family Health Organization (FHO), a blended capitation model. We compare primary care services and rates of emergency department ED visits between these two models. We also evaluate whether these outcomes vary by regular- and after-hours, and patient morbidity status.

METHODS

Physicians practicing in an FHG or FHO between April 2012 and March 2017 and their enrolled adult patients were included for analyses. The covariate-balancing propensity score weighting method was used to remove the influence of observable confounding and negative-binomial and linear regression models were used to evaluate the rates of primary care services, ED visits, and the dollar value of primary care services delivered between FHGs and FHOs. Visits were stratified as regular- and after-hours. Patients were stratified into three morbidity groups: non-morbid, single-morbid, and multimorbid (two or more chronic conditions).

RESULTS

6184 physicians and their patients were available for analysis. Compared to FHG physicians, FHO physicians delivered 14% (95% CI 13%, 15%) fewer primary care services per patient per year, with 27% fewer services during after-hours (95% CI 25%, 29%). Patients enrolled to FHO physicians made 27% more less-urgent (95% CI 23%, 31%) and 10% more urgent (95% CI 7%, 13%) ED visits per patient per year, with no difference in very-urgent ED visits. Differences in the pattern of ED visits were similar during regular- and after-hours. Although FHO physicians provided fewer services, multimorbid patients in FHOs made fewer very-urgent and urgent ED visits, with no difference in less-urgent ED visits.

CONCLUSION

Primary care physicians practicing in Ontario's blended capitation model provide fewer primary care services compared to those practicing in a blended FFS model. Although the overall rate of ED visits was higher among patients enrolled to FHO physicians, multimorbid patients of FHO physicians make fewer urgent and very-urgent ED visits.

The effect of internal salary incentives based on insurance payment on physicians' behavior: experimental evidence

BACKGROUND

Understanding how physicians respond to payment methods is crucial for designing effective incentives and enhancing the insurance system. Previous theoretical research has explored the effects of payment methods on physician behavior based on a two-level incentive path; however, empirical evidence to validate these theoretical frameworks is lacking. To address this research gap, we conducted a laboratory experiment to investigate physicians' behavioral responses to three types of internal salary incentives based on diagnosis-related-group (DRG) and fee-for-service (FFS).

METHODS

A total of 150 medical students from Capital Medical University were recruited as participants. These subjects played the role of physicians in choosing the quantity of medical services for nine types of patients under three types of salary incentives-fixed wage, constant fixed wage with variable performance wage, and variable fixed wage with variable performance wage, of which performance wage referred to the payment method balance under FFS or DRG. We collected data on the quantities of medical services provided by the participants and analyzed the results using the Friedman test and the fixed effects model.

RESULTS

The results showed that a fixed wage level did not have a significant impact on physicians' behavior. However, the patients benefited more under the fixed wage compared to other salary incentives. In the case of a floating wage system, which consisted of a constant fixed wage and a variable performance wage from the payment method balance, an increase in performance wage led to a decrease in physicians' service provision under DRG but an increase under FFS. Consequently, this resulted in a decrease in patient benefit. When the salary level remained constant, but the composition of the salary varied, physicians' behavior changed slightly under FFS but not significantly under DRG. Additionally, patient benefits decreased as the ratio of performance wages increased under FFS.

CONCLUSIONS

While using payment method balance as physicians' salary may be effective in transferring incentives of payment methods to physicians through internal compensation frameworks, it should be used with caution, particularly when the measurement standard of care is imperfect.

Physician altruism under the change from pure payment system to mixed payment schemes: experimental evidence

BACKGROUND

Mixed payment schemes have become one of the effective measures to balance medical costs and quality of medical services. However, altruism as an intrinsic motivation may influence the effect of switching from a pure payment system to mixed payment schemes. This study aimed to quantify physicians' altruism and analyze the effect of changes of payment system on physicians' altruism and thus proposed references for the reform of payment system.

METHODS

We simulated an exogenous payment system in a controlled laboratory with five experimental groups and 150 medical student subjects. Physicians' altruism was measured by estimating altruistic parameter and marginal rate of substitution. The non-parametric test and the least square regression analysis were used to analyze the differences of altruistic parameters between pure payment systems and mixed payment schemes. Finally, we analyzed the effect of changes in payment system accompanied by changes in trade-off range on physicians' altruism.

RESULTS

We find that the mean value of individual altruistic parameter is 0.78 and the marginal rate of substitution is 1.078. Their estimates at the individual level were significantly positively correlated (Spearman's ρ = 0.715, p < 0.01). The shift from pure payment system to mixed payment scheme reduced the altruistic parameter. However, the altruistic parameter increased with the increase of the trade-off range. Physicians who were more altruistic generated higher patients' health benefit. For each unit increase in altruistic parameter, the increase in patients' health benefit was lower in mixed payment scheme than in the pure payment system.

CONCLUSION

The estimates of altruistic parameters are reliable. Physicians attach a higher weight to patients' benefit than to their own profit. Mixed payment schemes improve physicians' behavior and relate to lower altruistic parameters; physicians only need to sacrifice less personal profits to generate the same or even higher altruistic parameter as under the pure payment system. The design of mixed payment schemes that make the interests of physicians and patients close to each other by reducing the trade-off range can provide implication for the reform of payment system in which the physicians' interest and the patients' benefit are consistent.

Effects of fee-for-service, diagnosis-related-group, and mixed payment systems on physicians’ medical service behavior: experimental evidence

Background

Healthcare reforms in many countries have shown a movement from pure payment systems to mixed payment systems. However, there remains an insufficient understanding of how to design better mixed payment systems and how such systems, especially Diagnosis-Related-Group (DRG)-based systems, benefit patients. We therefore designed a controlled laboratory experiment to investigate the effects of fee-for-service (FFS), DRG, and mixed payment systems on physicians’ service provision.

Methods

A total of 210 medical students were recruited from Capital Medical University as subjects. They, in the role of physicians, were randomly divided into seven groups and chose the quantity of medical services for different patient types under pure FFS, pure DRG, or mixed payment schemes that included two FFS-based mixed payment schemes and three DRG-based mixed payment schemes. There were five rounds of each group of experiments, and each subject made 18 decisions per round. The quantity of medical services provided by subjects were collected. And relevant statistics were computed and analyzed by nonparametric tests and random effects model.

Results

The results showed that the physicians’ overprovision (underprovision) of services under FFS (DRG) schemes decreased under mixed payment schemes, resulting in higher benefit to patients under mixed payment schemes. Patients’ health conditions also affected physicians’ behavior but in different directions. Higher disease severity was associated with higher deviation of physicians’ quantity choices from the optimal quantity under DRG and DRG-based mixed payment schemes, while the opposite was found for FFS and FFS-based mixed payment schemes.

Conclusions

Mixed payment systems are a better way to balance physicians’ profit and patients’ benefit. The design of mixed payment systems should be adjusted according to the patient’s health conditions. When patients are in lower disease severity and resource consumption is relatively small, prospective payments or mixed systems based on prospective payments are more suitable. While for patients in higher disease severity, retrospective payments or mixed systems based predominantly on retrospective payments are better.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12913-022-08218-5.

Emergency department use following incentives to provide after-hours primary care: a retrospective cohort study

BACKGROUND:

Access to primary care outside of regular working hours is limited in many countries. This study investigates the relation between the after-hours premium, an incentive for primary care physicians to provide services after hours, and less-urgent visits to the emergency department in Ontario, Canada.

METHODS:

We analyzed a retrospective cohort of a random sample of Ontario residents from April 2002 to March 2006, and a subcohort of patients followed from April 2005 to March 2016. We linked patient and primary care physician data with emergency department visit data. We used fixed-effects regression models to analyze the association between the introduction of the after-hours premium, as well as subsequent increases in the value of the premium, and the number of monthly emergency department visits.

RESULTS:

The sample consisted of 586 534 patients between 2002 and 2006, and 201 594 patients from 2005 to 2016. After controlling for patient and physician characteristics, seasonality and time-invariant patient confounding factors, introduction of the after-hours premium was associated with a reduction of 1.26 less-urgent visits to the emergency department per 1000 patients per month (95% confidence interval −1.48 to −1.04). Most of this reduction was observed in after-hours visits. Sensitivity analysis showed that the monthly reduction in less-urgent visits to the emergency department was in the range of −1.24 to −1.16 per 1000 patients. Subsequent increases in the after-hours premium were associated with a small reduction in less-urgent visits to the emergency department.

INTERPRETATION:

Ontario’s experience suggests that incentivizing physicians to improve access to after-hours primary care reduces some less-urgent visits to the emergency department. Other jurisdictions may consider incentives to limit less-urgent visits to the emergency department.

Mental Health Services Provision in Primary Care and Emergency Department Settings: Analysis of Blended Fee-for-Service and Blended Capitation Models in Ontario, Canada

Treating mental illnesses in primary care is increasingly emphasized to improve access to mental health services. Although family physicians (FPs) or general practitioners are in an ideal position to provide the bulk of mental health care, it is unclear how best to remunerate FPs for the adequate provision of mental health services. We examined the quantity of mental health services provided in Ontario's blended fee-for-service and blended capitation models. We evaluated the impact of FPs switching from blended fee-for-service to blended capitation on the provision of mental health services in primary care and emergency department using longitudinal health administrative data from 2007 to 2016. We accounted for the differences between those who switched to blended capitation and non-switchers in the baseline using propensity score weighted fixed-effects regressions to compare remuneration models. We found that switching from blended fee-for-service to blended capitation was associated with a 14% decrease (95% CI 12-14%) in the number of mental health services and an 18% decrease (95% CI 15-20%) in the corresponding value of services. This result was driven by the decrease in services during regular-hours. During after-hours, the number of services increased by 20% (95% CI 10-32%) and the corresponding value increased by 35% (95% CI 17-54%). Switching was associated with a 4% (95% CI 1-8%) decrease in emergency department visits for mental health reasons. Blended capitation reduced provision of mental health services without increasing emergency department visits, suggesting potential efficiency gain in the blended capitation model in Ontario.

Quality of Diabetes Care in Blended Fee-for-Service and Blended Capitation Payment Systems

OBJECTIVES

In the middle to late 2000s, many family physicians switched from a Family Health Group (FHG; a blended fee-for-service model) to a Family Health Organization (FHO; a blended capitation model) in Ontario, Canada. The evidence on the link between physician remuneration schemes and quality of diabetes care is mixed in the literature. We examined whether physicians who switched from the FHG to FHO model provided better care for individuals living with diabetes relative to those who remained in the FHG model.

METHODS

Using longitudinal health administrative data from 2006 to 2016, we investigated the impact of physicians switching from FHG to FHO on 8 quality indicators related to diabetes care. Because FHO physicians are likely to be systematically different from FHGs, we employed propensity-score-based inverse probability-weighted fixed-effects regression models. All analyses were conducted at the physician level.

RESULTS

We found that FHO physicians were more likely to provide glycated hemoglobin testing by 2.75% (95% confidence interval [CI], 1.89% to 3.60%), lipid assessment by 2.76% (CI, 1.95% to 3.57%), nephropathy screening by 1.08% (95% CI, 0.51% to 1.66%) and statin prescription by 1.08% (95% CI, 0.51% to 1.66%). Patients under FHOs had a lower estimated risk of mortality by 0.0124% (95% CI, 0.0123% to 0.0126%) per physician per year. However, FHG and FHO physicians were similar for annual eye examination, prescription of angiotensin-converting enzyme inhibitors (or angiotensin II receptor blockers) and patients' risk of avoidable diabetes-related hospitalizations.

CONCLUSIONS

Compared with blended fee-for-service, blended capitation payment is associated with a small, but statistically significant, improvement in some aspects of diabetes care.