Payments to Physician Practices and Incentives to Serve Different Racial and Ethnic Groups

In the US, a physician can be paid very different amounts for treating different patients, even when providing identical services. Understanding physician practices' financial incentives to serve different racial and ethnic groups may help inform payment policies to reduce health disparities.

To measure disparities across patient racial and ethnic groups in per-visit payment to physician practices from health insurers and other sources, adjusted for visit content, geographic market, and year, and to quantify the role of health insurance source and other factors in these disparities.

A unique, nationally representative dataset of outpatient visits containing survey-obtained patient race and ethnicity and payment amounts to physician practices from health insurers and other sources was analyzed. Data were collected from 2014 to 2021.

Payment disparities were defined as gaps between patient groups defined by race and ethnicity in total payments per visit to physician practices, adjusted for visit content, geographic market, and year. Kitagawa-Oaxaca-Blinder decompositions were used to estimate the magnitude of these disparities and to quantify the roles of factors like health insurance.

The sample included 38 722 patients and 152 336 outpatient visits for evaluation and management services; a total of 8126 (21.0%) were Hispanic, 6150 (15.9%) were non-Hispanic Black, and 24 446 (63.1%) were non-Hispanic White. A total of 152 336 outpatient visits were included for evaluation and management services. In adjusted analyses, outpatient payments were 8.8% (95% CI, 6.7-11.0) less for visits with non-Hispanic Black patients and 9.8% (95% CI, 7.2-12.4) less for visits with Hispanic patients compared with visits with non-Hispanic White patients. Payment gaps were largest for children (13.9% [95% CI, 11.8-16.0] for non-Hispanic Black children; 15.1% [95% CI, 12.8-17.4] for Hispanic children), smaller when adjusted for insurance source (4.9% [95% CI, 2.7-7.1] for non-Hispanic Black patients; 5.6% [95% CI, 3.0-8.3] for Hispanic patients), and absent among patients with fee-for-service Medicare (1.2% [95% CI, -1.5 to 3.9] for non-Hispanic Black patients; -0.6% [95% CI, -4.4 to 3.2] for Hispanic patients).

In this study, US physician practices were paid more for outpatient visits with non-Hispanic White patients than for outpatient visits with Hispanic or non-Hispanic Black patients. Payment disparities were larger in pediatrics and partly explained by insurance. Differential financial incentives to serve non-Hispanic White patients may worsen disparities in health care access, utilization, and quality.