Doctors & Managed Care

September 16, 2008
Physician's Money Digest, February28 2003, Volume 10, Issue 4

Even as Congress schedules debates onbills dealing with managed care, factorssuch as patients' rights, state legislation,consumer backlash, and the loomingthreat of federal laws have broughtabout several changes in the managed care landscape.

One result of this kinder, gentler brand of managedcare is the continued participation in managed careplans by the nation's physicians. According to a surveyby the Center for Studying Health System Change (HSC;, 90% of US doctors had at least 1contract with a managed care plan in 2001. According toHSC officials, the results are somewhat surprising, giventhe average doctor's attitude toward managed careplans and the word-of-mouth reports of widespreaddefections from managed care panels.

A key factor may be the change in the financial relationshipbetween the plans and many doctors. Between1997 and 2001, there was a significant drop in the use ofcapitation payments as a means of reimbursing physicians.In 2001, the number of practices that receivedsome revenue from capitation was less than half(48.6%), compared with 57.4% in 1997. Doctors prefernoncapitated reimbursement, since capitation puts thephysician at risk for high-cost patents.

The drop in capitated payments was also seen amongprimary-care physicians, who are most likely to receivethem. The survey shows that about two thirds of primary-care physicians got capitated payments in 2001, comparedwith 76.6% in 1997.


The percentage of revenue that managed care plansgenerate went from 42.7% in 1997 to 45.8% in 2001,while the number of managed care contracts for the averagemedical practice increased slightly, from 12.4 to 13.1.

While HSC officials see these statistics as signs of reformin managed care, many doctors disagree. According to theAmerican Medical Association, many physicians tie the risein managed care revenue to an increase in the number ofmanaged care patients they see, not to any hike in reimbursements.Others point out that the steady rate of doctorparticipation in managed care plans is because these planscover a large majority of the population in many areas.

Other studies are more indicative of doctor dissatisfactionwith managed care, including one by the KaiserFamily Foundation showing that 75% of doctors thinkmanaged care has a negative impact on the way theypractice medicine today.


The HSC survey also highlights a decrease in the numberof doctors whose compensation is tied to profiling(ie, comparing treatment patterns with those of otherphysicians). Profiling was down from 15.6% in 1997 to12.2% in 2001. Overall, about one third of the physicianshad their compensation linked to incentives that includedsuch profiling, along with patient-satisfaction surveysand quality-of-care measures.

The effect of nonfinancial incentives such as patientsurveys and practice guidelines is increasing, with 61.6%of the doctors reporting in 2001 that feedback frompatient surveys affected how they practiced medicine,up from 58% in 1997. Similarly, in 2001, 56.2% of thedoctors said that treatment guidelines had an effect ontheir practice, up from 45.9% in 1997.