Changing Physician Payment for Medicare Patients

Projected Effects on the Quality of Care

Published in: Western Journal of Medicine, v. 145, No. 5, 1986, p. 704-709

Posted on RAND.org on January 01, 1986

by Glenn T. Hammons, Robert H. Brook, Joseph P. Newhouse

Congress and the Reagan Administration, in an effort to contain costs, are considering changes in the way physicians are paid when they care for Medicare patients. By examining the effects on quality of care of several alternative ways physicians might be paid, including modified fee for service, physician diagnosis-related groups and capitation through health maintenance organizations, we can predict the kinds of effects on quality of care most likely to occur and the kinds of patients most likely to be affected. Under each of the payment alternatives, poorer and sicker patients are at greatest risk for reduced access to care and quality of care. These findings underline the need for rigorous experiments to assess the effects of changes in physician payment on quality of care and the need for monitoring and assurance of quality in a new payment system.

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