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The Relationship between Physician Compensation Strategies and the Intensity of Care Delivered to Medicare Beneficiaries

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Keywords: Physician payment; financial incentives; Medicare; costs of care

Objective: To examine the relationship between primary care physicians' (PCPs) payment arrangements and the total costs and intensity of care for specific episodes of care for Medicare beneficiaries.

Data Sources/Study Setting: We combined data from the 2004 to 2005 Community Tracking Study Physician Survey on PCP compensation methods with administrative data from the Medicare program for beneficiaries to whom these physicians provided services over the time period 2004–2006.

Study Design: Cross-sectional analysis of physician survey data linked to Medicare claims.

Principal Findings: The 2,211 PCP respondents included 937 internists and 1,274 family or general physicians who were linked to more than 250,000 Medicare enrollees. Most physicians (62 percent) had been in practice for 11 or more years and 87 percent were board certified. The total spending models show that for both employed physicians and owners, those in highly capitated practice environments had the lowest risk adjusted spending per beneficiary, whereas those receiving just productivity payments had the highest spending. These physicians also had lower intensity of care for episodes of care.

Conclusions: Physicians in highly capitated practices had the lowest total costs and intensity of care, suggesting that these physicians develop an overall approach to care that also applies to their FFS patients.

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