MANAGED CARE INCENTIVES Should Be Disclosed to Patients.

• Position: Professor Thomas H. Gallagher believes that patients should be informed of any financial incentives offered to their doctors - Brief Article

What if your lawyer got paid more if you received a smaller settlement or your mechanic reaped a bonus for withholding service on your car? In an effort to contain health care costs, many managed care companies reward doctors who restrict medical care. Such financial incentives should be disclosed to patients and consumer groups, argues Thomas H. Gallagher, a primary care physician and instructor in medicine at Washington University School of Medicine in St. Louis (Mo.). "Disclosure might lead plans to be more cautious in the types of incentives they adopt. And it might make patients scrutinize their doctors' recommendations more closely. In theory, it also could allow market forces to protect patients."

Financial incentives long have been part of medicine. The fee-for-service system encouraged physicians to provide more health care services, some of which may have been unnecessary. Managed care plans hope that providing them with new types of financial incentives will encourage doctors to be more cost-conscious in the medical care they provide, ordering only those services that are medically necessary.

The incentives come in a number of different forms. Some plans give physicians a year-end bonus if they haven't referred too many patients for specialty care or laboratory tests. Others withhold a certain percentage of salary if cost-containment goals are not met. Many plans capitate services, paying doctors a set amount per patient regardless of the number of visits. These incentives often are combined--a physician may be promised $24 per patient per month, for instance, but receive just $16 if the cost of referrals exceeds a certain amount.

Financial incentives could have adverse effects, Gallagher points out. "If doctors withhold care that is really needed, patients' health care could suffer. But even if incentives do not affect patient care, they may create the perception of conflict of interest, damaging the trust between doctors and patients."

He says patients should be aware of incentives so they can become educated health-care consumers, and he urges health plans and doctors to disclose them when asked. "It is in the self-interest of managed care plans and physician groups to be more open about...