Does payment drive procedures? Payment for specialty services and procedure rate variations in 3 HMOs

Abstract

Objectives: To study how payment for specialty services affects the rates of performance of invasive procedures by physicians in a number of specialties. Study Design: Observational study. Patients and Methods: Administrative data from 1996-1997 and 1997-1998 from 3 large health maintenance organizations (HMOs) in the Midwestern and western United States were used to study variations in procedure rates associated with different methods of paying for cardiology, gastroenterology, ophthalmology, orthopedic, and ear, nose and throat services within each HMO. The age-, sex-, and comorbidity adjusted probabilities of undergoing selected, potentially discretionary procedures, were compared within each plan by payment method. Results: After adjustment, rates under fee-for-service payment tended to be higher than those under capitation or salary payment, whereas there was no clear pattern for salary versus capitation payment. Even within a single specialty in a single plan, however, rates did not always follow the same pattern for different procedures. Conclusions: The payment method for specialty services used by these 3 health plans was variably associated with how likely patients were to undergo a variety of invasive procedures. The effects of contract payment methods for specialty services on health care costs, quality, and outcomes should be further studied, but such studies will challenge the capabilities of health plan data systems