Physician Compensation Strategies and Quality of Care for Medicare Beneficiaries

OBJECTIVES: To examine the relationship between the compensation strategies of primary care physicians (PCPs) and the quality and outcomes of care delivered to Medicare beneficiaries. STUDY DESIGN: Cross-sectional analysis of physician survey data linked to Medicare claims. We used a previously constructed typology that was developed based on the survey to categorize physician compensation strategies. METHODS: We combined data from the 2004-2005 Community Tracking Study Physician Survey on PCP compensation methods with administrative claims from the Medicare program. We analyzed the proportion of eligible beneficiaries receiving each of 7 preventive services and rates of preventable admissions for acute and chronic conditions. We measured the latter using Prevention Quality Indicators (PQIs), available from the Agency for Healthcare Research and Quality. RESULTS: The 2211 PCP respondents included 937 internists and 1274 family or general physicians who were linked to more than 250,000 Medicare enrollees. Employed physicians with productivity and other incentives were more likely to deliver care of high quality when compared with salaried physicians. For instance, the odds of appropriate monitoring for diabetics ranged from 1.26 to 1.47 (all P < .01). Physicians in highly capitated environments had similar or better quality compared with physicians in other environments across most measures. The association between compensation strategies and outcomes of care as measured by PQIs was inconsistent, although owners with no other incentives had consistent higher rates of acute and chronic PQI admission (eg, for the chronic PQI composite: odds ratio = 1.07; 95% CI, 1.02-1.12). CONCLUSIONS: Physician compensation strategies are associated with the quality of preventive services delivered to Medicare patients, but inconsistently associated with outcomes of care. Increasing use of global payment strategies is not likely to lead to lower quality.