Capitated Payment for Medical Care and the Role of the Physician

If a patient's employer or health insurer walked into a physician's office while the patient was waiting to be seen and offered the physician money to withhold services from the patient, the physician would probably give a frosty refusal. To do otherwise would be contrary to the physician's role as trusted advocate for the patient's best interests. And yet, this conflict of interest is central to capitated care, which is increasingly accepted by physicians: Employers and health insurers do create financial incentives to withhold care. Efforts to manage this conflict of interest, such as those proposed by Swartz and Brennan in this issue [1], are nothing less than attempts to define the role of the physician in the face of such incentives, and they deserve our careful consideration.

It can be argued that the problem of health care costs has been oversold [2], but it is clear that the recent rate of growth of these costs cannot continue indefinitely. It is also clear that the long-dominant fee-for-service payment system has provided less incentive for cognitive effort and the management of patients' overall health than it has for procedural interventions; it has thereby rewarded the provision of unnecessary and even disadvantageous treatments. Unfortunately, many persons now believe in or promulgate the fallacy of “black or white”: If the existing system, which gives incentives for excessive treatment, is bad, then its opposite, a system that provides incentives for giving less treatment by putting the provider at financial risk for the costs of care, must be good. However, a health payment system in which incentives are based solely on this premise is only “managed cost,” not “managed care.” The RAND Health Insurance Experiment's finding that health maintenance organization insurance equally reduced both inappropriate and appropriate treatments [2] …