HMO financial arrangements with rural physicians

The growth of managed care in general suggests that a substantially larger number of rural primary care physicians will be asked to enter into risk-bearing contracts with Health Maintenance Organizations (HMOs) in the near future. This article describes the different types of payment and risk-sharing arrangements that exist between HMOs and primary care physicians and presents survey data relating to their prevalence in rural areas. Also, it describes in detail the payment arrangements used by four HMOs that contract with rural primary care physicians. The concluding discussion highlights policy issues regarding risk-sharing arrangements that are especially pertinent in rural settings.