Physician Payment Policies: Impacts and Implications

This paper reviews recent changes in physician payment policies, examines evidence on their impacts, and discusses their implications for researchers and policy makers. It first develops a conceptual framework to help explore the economic incentives inherent in different physician payment schemes. It then reviews evidence on the impacts of recent changes in physician payment methods; first, for fee-for-service, and then for capitated systems like HMOs. It concludes that much more research needs to be conducted on HMOs to determine the impact of different physician payment incentives on utilization, expenditures, clinical outcomes, and patient satisfaction.