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Physician Financial Incentives and Care for the Underserved in the United States
Alyna T. Chien, MD, MS; Marshall H. Chin, MD, MPH; G. Caleb Alexander, MD, MS; Hui Tang, MS; and Monica E. Peek, MD, MPH
Patient Attitudes About Specialty Follow-up Care by Telephone
Jessica A. Eng, MD; Cecily J. Hunter, BA; Margaret A. Handley, PhD; Christy K. Boscardin, PhD; Ralph Gonzales, MD; and Sara L. Ackerman, PhD
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Yelba M. Castellon, MD; Shahrzad Bazargan-Hejazi, PhD; Miles Masatsugu, MD; and Roberto Contreras, MD
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Joshua P. Cohen, PhD; Abigail Felix, BA; and Magdalini Vasiadi, PhD
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Peter Cunningham, PhD; and Emily Carrier, MD
Formulary Restrictions on Atypical Antipsychotics: Impact on Costs for Patients With Schizophrenia and Bipolar Disorder in Medicaid
Seth A. Seabury, PhD; Dana P. Goldman, PhD; Iftekhar Kalsekar, PhD; John J. Sheehan, PhD; Kimberly Laubmeier, PhD; and Darius N. Lakdawalla, PhD
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Rita L. Hui, PharmD, MS; Brian D. Yamada, PharmD; Michele M. Spence, PhD; Erwin W. Jeong, PharmD; and James Chan, PharmD, PhD
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Kari L. Olson, BSc(Pharm), PharmD; Michele D. Wood, PharmD; Thomas Delate, PhD; Lisa J. Lash, PharmD; Jon Rasmussen, PharmD; Anne M. Denham, PharmD; and John A. Merenich, MD

Physician Financial Incentives and Care for the Underserved in the United States

Alyna T. Chien, MD, MS; Marshall H. Chin, MD, MPH; G. Caleb Alexander, MD, MS; Hui Tang, MS; and Monica E. Peek, MD, MPH
Financial incentives alter the quality and quantity of care that physicians provide. Understanding physicians' recent experience with incentives may help shape current payment reform efforts.
In this nationally representative survey of physicians, 68.5% of respondents indicate that their compensation is variable (Table 2). Among physicians reporting variable compensation, a majority (67.7%) report having their compensation tied to productivity; a minority indicate that their pay is tied to quality measures (18.7%), patient satisfaction (21.4%), or resource use (14.0%).

Relationship Between Variable Compensation and Degree to Which Physicians Serve Vulnerable Populations

In bivariate analysis, the degree to which compensation is variable depends significantly upon the degree to which practices derive revenues from Medicaid or physicians care for patients with Hispanic backgrounds; there is no association for physicians caring for varying proportions of African American patients or of patients facing language barriers (Table 2). These relationships remain significant in multivariate analysis (Table 3). Physicians with 50% or more of their practice revenue from Medicaid have three-fourths the odds of receiving variable compensation compared with physicians with 5% or less of their practice revenues from Medicaid (adjusted OR: 0.73; 95% CI, 0.57-0.95, P <.05). Findings are similar for physicians with at least 50% Hispanic patients on their panels (adjusted OR: 0.74; 95% CI, 0.56-0.99, P <0.05) compared with those whose patient panels are 5% or less Hispanic.

Relationship Between Performance Incentives and Degree to Which Physicians Serve Vulnerable Populations

Among physicians who indicate that their compensation depends on performance incentives, there is a significant bivariate association between physicians’ percentage of practice revenues from Medicaid and all 4 of our performance incentives of interest (Table 4). This relationship remains significant after multivariate analysis adjusting for physician specialty, practice type, and area-level factors. Physicians who report deriving 6% to 24% of their practice revenues from Medicaid have significantly greater odds of reporting that their compensation is tied to productivity (adjusted OR 1.19, 95% CI, 1.01-1.40), care quality (adjusted OR 1.45, 95% CI, 1.19-1.76), patient satisfaction (adjusted OR 1.55, 95% CI, 1.28-1.87), and resource use (adjusted OR 1.43, 95% CI, 1.16-1.76) compared with those deriving 5% or less of practice revenues from Medicaid. Within the group of physicians, physicians at practices with 50% or more of their revenues from Medicaid have significantly lower odds of receiving incentives for productivity (adjusted OR 0.69, 95% CI, 0.53-0.88).

After adjusting for covariates, there is no consistently significant relationship between use of our 4 performance incentives of interest and the percentage of patient panels that are Hispanic, African American, or facing language barriers.

Practice Characteristics and Physician Performance Incentives

The above multivariate analysis also confirms that the odds of physicians having variable compensation is significantly associated with practice type, level of capitation, and regional location, but not with physician specialty or area SES (Table 3). For example, physicians working in group/staff model HMOs are nearly 3 times as likely to report variable compensation as physicians working in solo/2-physician practices (adjusted OR 2.84, 95% CI, 1.79-4.51).

When evaluating the types of performance incentives; physician specialty, practice type, capitation level, and regional location are also—to varying degrees—significantly associated with incentives for productivity, care quality, patient satisfaction, and resource use in multivariate analysis (Table 4). For example, medicine subspecialists and surgeons have significantly lower odds of experiencing incentives for care quality, patient satisfaction, and resource use compared with primary care physicians, and surgeons alone have significantly greater odds of reporting incentives for productivity. Physicians in group/staff model HMOs have 2 to 8 times greater odds of reporting incentives for care quality, patient satisfaction, and resource use, but do not have different odds of exposure to productivity incentives.


First, the unadjusted results show that, in 2008, US physicians faced a variety of financial incentives to alter care quantity and quality, and that productivity incentives predominated. Although governmental and private payers implemented numerous large-scale interventions aimed at better aligning financial rewards with healthcare quality in the years immediately preceding the 2008 HTPS, the prevalence of productivity incentives remained similar to past waves of this survey’s predecessor, the Community Tracking Survey (Table 1).20,22,23,30,31

Second, the adjusted multivariate results suggest how complex the relationship between physicians’ financial incentives and Medicaid were at that time. On the one hand, the more that practices derived revenue from Medicaid, the less likely physicians were to report having variable compensation. This finding corroborates anecdotal information about the prevalence of fixed salaries in underserved settings.12,32-34 On the other hand, physicians receiving variable compensation were significantly more likely to report all 4 types of performance incentives if their practices derived 6% to 24% of their revenues from Medicaid. The observation is consistent with the idea that physicians working in practices that are able to modulate the degree to which their practices care for Medicaid-insured patients may be better able to create and operate performance-based incentive programs.44 Practices may need to be of a certain size, level of infrastructure, or degree of technical sophistication in order to titrate Medicaid revenues or operate performance-based compensation programs.

Third, we show that the relationship between physicians’ financial incentives and the degree to which physicians serve patients of minority racial/ethnic backgrounds also appears complex. After adjusting for key covariates, physicians with patient panels that were more than 50% Hispanic were significantly less likely to report variable compensation. Perhaps this is because physicians working with large panels of Hispanic patients find it difficult to provide culturally appropriate care when productivity incentives are in place and negotiate alternate compensation arrangements. Or, possibly, Hispanic patients are located in settings where variable compensation is less common and our covariates were insufficient to adjust for those other factors. Or, another causative mechanism may exist that we are unaware of. Further qualitative work could shed important light on why physicians caring for Hispanic patients and physicians in underserved settings are more likely to receive fixed compensation.

Fourth, among physicians receiving variable compensation, there appeared to be no significant correlation between the degree to which physicians care for minority patients and the types of performance incentives physicians face after these adjustments (eg, practice type and setting). That performance incentives are no different for physicians who serve vulnerable patients versus those who do not is striking given the difference in the complexity of the clinical work and the magnitude of disparities in healthcare quality among these populations. This study underscores the notion that physicians working with greater proportions of minority patients may benefit from performance incentives that support disparity reduction.45

Interest in aligning physicians’ financial incentives with desired healthcare processes and outcomes is only likely to rise as physicians increasingly seek employee positions in large provider organizations. Yet each incentive type has an advantage and disadvantage. Productivity incentives may increase visit access, but reduce the amount of time that physicians have with those patients.22 Quality and patient satisfaction incentives may reward physicians for addressing sociocultural barriers important to vulnerable populations,25 but could also deter them if performance assessment is invalid or unreliable.46 Resource use incentives may reduce waste, but exacerbate underuse of recommended services that is already prevalent within minority populations (eg, cancer screening, influenza vaccinations).26,27,30 It is critical to understand how these incentives vary depending on patient, physician and practice characteristics to target interventions and pursue the “right blend” of financial incentives.5

Our study has 4 main limitations. First, the data are based on physician self-report and may not accurately reflect their actual financial incentives. However, we have no reason to suspect social desirability bias in responses and would expect even inaccurate responses to be informative. That is, if a physician believes that he or she is exposed to quality-based incentives, that physician is more likely to behave accordingly, even if the incentives are not actually present. Second, our analysis does not account for reputational incentives such as public reporting, which may have different effects among physicians and on healthcare disparities.47 Third, although solo/2-physician practices responded that they are less likely to have variable compensation, those working in smaller practices may be more likely to be influenced by variation in their practices' profitability than their counterparts in staff-model practices. Fourth, this study does not contain any information on how financial incentives should be ideally structured for different care settings.

Nonetheless, our study has several strengths. First, it examines a time period that is between 2 different waves of payment reforms taking place across the nation. Second, it is, to our knowledge, the first study to examine relationships between financial incentives and the extent to which a physician treats various types of vulnerable patient populations. Third, it utilizes a nationally representative data set.

In summary, we found that in 2008, the majority of frontline physicians in our nation indicated receiving variable compensation, and that the most frequently reported performance measure was that for productivity. We also found that physicians’ financial incentives are significantly modified by the degree to which physicians care for patients who are Medicaid-insured or Hispanic, and not substantially altered by the degree to which they care for patients who are African American or face language barriers. It remains to be seen whether the ACA—with its emphasis on continued use of P4P, introduction of global payment strategies, and ACOs— will yield significant changes in the degree to which physicians face different types of financial incentives when they do and do not care for vulnerable populations.

Author Affiliations: Division of General Pediatrics, Boston Children’s Hospital, Boston, MA (ATC); Department of Pediatrics, Harvard Medical School, Boston, MA (ATC); Section of General Internal Medicine, Department of Medicine, University of Chicago, Chicago, IL (MHC, MEP); Chicago Center for Diabetes Translation Research, University of Chicago, Chicago, IL (MHC, MEP); Center for Health and Social Sciences, University of Chicago, Chicago, IL (MHC, MEP); MacLean Center for Clinical Medical Ethics, University of Chicago, Chicago, IL (MHC, MEP); Department of Epidemiology, Johns Hopkins School of Public Health, Baltimore, MD (GCA); Center for Drug Safety and Effectiveness, Johns Hopkins School of Public Health, Baltimore, MD (GCA); Department of Pharmacy Practice, University of Illinois at Chicago School of Pharmacy, Chicago, IL (HT); Center for the Study of Race, Politics and Culture, University of Chicago, Chicago, IL (MEP).

Funding Sources: This research was supported by the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK); Chicago Center for Diabetes Translation Research (P30 DK092949); and Diabetes Research and Training Center (P60 DK20595). At the time that this research was conducted, Dr Chien had a career development award from the Agency for Healthcare Research and Quality (K08 HS017146), Dr Peek was supported by the Robert Wood Johnson Foundation (RWJF) Harold Amos Medical Faculty Development program, and the Mentored Patient-Oriented Career Development Award of the National Institute of Diabetes and Digestive and Kidney Diseases (K23 DK075006), and Dr Alexander had career development awards from the Robert Wood Johnson Physician Faculty Scholars Program and the Agency for Healthcare Research and Quality (K08 HS15699-01A1). Support for Dr Chin is provided by a Midcareer Investigator Award in Patient-Oriented Research from the NIDDK (K24 DK071933).

Author Disclosures: The authors (ATC, MHC, GCA, HT, MEP) report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (ATC, MHC, GCA, MEP); analysis and interpretation of data (ATC, MHC, GCA, HT, MEP); drafting of the manuscript (ATC, GCA, MEP); critical revision of the manuscript for important intellectual content (ATC, MHC, GCA, HT, MEP); statistical analysis (ATC, HT); administrative, technical, or logistical support (ATC, MEP); and supervision (ATC, MHC).

Address correspondence to: Alyna T. Chien, MD, MS, 300 Longwood Ave, Boston, MA 02115. E-mail:
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