Patient Trust is Not Harmed when HMOs Pay Doctors a Bonus for Holding Down Costs

March 12, 2002

WINSTON-SALEM, N.C. - Contrary to popular belief, patient trust of health maintenance organizations (HMOs) increases when patients are told that their physicians are rewarded for saving money, according to a Wake Forest University study reported in the March issue of Health Affairs.

"The findings are based on a controlled study that observes the real-world impact on trust of telling HMO members how the health plan actually pays its doctors," said the research team headed by Mark Hall, J.D., professor of law and public health.

"We found that learning about cost containment incentives did not reduce people''s trust either in their doctor or in the HMO," Hall said. "In fact, this slightly increased trust in their doctor."

The researchers said the result may be a consequence both of displaying candor and of increased understanding of the positive features of the health plans.

The study involved 1,918 participants in two different health care plans. One paid primary care doctors on a capitation basis -- the same amount for each enrolled patient each year, regardless of the number of doctor visits. The other plan paid doctors on a discounted fee for service schedule. Both plans paid bonuses based on meeting budgetary goals, maintaining patient satisfaction, and encouraging patients to use preventive services.

Both before and after disclosing the physician incentives, all participants were asked a series of trust questions about their primary care doctor and about their HMO, as well as questions about past experiences with their doctor and the HMO. After the first series of trust questions, participants were randomly assigned to groups. Disclosure groups were explicitly told how their HMO pays their primary care physician; control groups got no additional information. Then, a month later, the battery of trust questions was repeated.

Disclosure of the incentives was associated with a 1.4 percent increase in average physician trust among members of the capitated plan compared to controls, which was statistically significant. In the other type of health plan, the difference was not significant.

When the investigators focused only on those patients whose knowledge of the incentives increased as a result of the disclosures, then physician trust increased by 3 percent.

"Our study shows that HMOs can use and disclose physician incentives without harming the doctor-patient relationship," Hall explained. "This is big news because HMOs'' use of financial incentives is one of the central issues in the massive class action lawsuits that have been brought against the HMO industry. The suits claim that physician incentives are bad for patients and should not have been kept secret."

The Wake Forest researchers noted that their findings are limited by several factors. The incentives used by these health plans were more positive than some HMOs use, and the disclosure emphasized both the positive and the potentially negative features of incentives.

"These factors may have caused these patients to respond more positively than people would in a different health plan," Hall explained.

The research team also included Rajesh Balkrishnan, Ph.D., assistant professor of public health sciences, Elizabeth Dugan, Ph.D., senior research scientist at the New England Research Institutes.and Donald Bradley M.D., of Blue Cross and Blue Shield of North Carolina.


Contact: Robert Conn, Jim Steele or Mark Wright at (336) 716-4587

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