Blended payment methods in physician organizations under managed care.

Area of Science:

• Health Economics
• Healthcare Management
• Physician Reimbursement Models

Background:

• Independent Practice Associations (IPAs) are exploring innovative physician reimbursement strategies.
• Economic theory suggests hybrid payment models outperform single-tier systems.
• Balancing individual physician productivity with clinical cooperation is a key objective.

Purpose of the Study:

• To identify and analyze emerging physician payment methods used by IPAs.
• Focus on IPAs contracting with managed care organizations.
• Examine payment structures for primary care and specialty physicians.

Main Methods:

• Case study analysis of 7 large IPAs in the San Francisco metropolitan area.
• Data collected during summer and fall 1998.
• Examined payment methods for primary care physicians, specialists, and specialty departments.

Main Results:

• All studied IPAs utilized blended payment methods combining fee-for-service and subcapitation.
• Primary care payments involved capitation adjusted for patient factors, supplemented by fee-for-service for specific services and procedures.
• Specialty departments received capitation, with internal budget allocation to individual specialists using various hybrid mechanisms.

Conclusions:

• IPAs are innovating by combining fee-for-service and capitation elements.
• These blended payment methods are being applied to both primary care and specialty physicians.
• Emerging models reflect a strategic approach to physician reimbursement within managed care.