Association Between Physician Compensation Methods and Delivery of Guideline-Concordant STD Care: Is There a Link?

July 1, 2005
Nadereh Pourat, PhD

Thomas Rice, PhD

Ming Tai-Seale, PhD

Gail Bolan, MD

Jas Nihalani, MPH

Volume 11, Issue 7

Objective: To examine the association between primary carephysician (PCP) reimbursement and delivery of sexually transmitteddisease (STD) services.

Study Design: Cross-sectional sample of PCPs contracted withMedicaid managed care organizations in 2002 in 8 Californiacounties with the highest rates of Medicaid enrollment andchlamydia cases.

Methods: The association between physician reimbursementmethods and physician practices in delivery of STD services wasexamined in multiple logistic regression models, controlling for anumber of potential confounders.

Results: Evidence of an association between reimbursementbased on management of utilization and the PCP practice of providingchlamydia drugs for the partner's treatment was most apparent.In adjusted analyses, physicians reimbursed with capitationand a financial incentive for management of utilization (odds ratio[OR] = 1.63) or salary and a financial incentive for management ofutilization (OR = 2.63) were more likely than those reimbursedunder other methods to prescribe chlamydia drugs for the partner.However, PCPs least often reported they annually screenedfemales aged 15-19 years for chlamydia (OR = 0.63) if reimbursedunder salary and a financial incentive for productivity, or screenedfemales aged 20-25 years (OR = 0.43) if reimbursed under salaryand a financial incentive for financial performance.

Conclusion: Some physician reimbursement methods mayinfluence care delivery, but reimbursement is not consistently associatedwith how physicians deliver STD care. Interventions toencourage physicians to consistently provide guideline-concordantcare despite conflicting financial incentives can maintain quality ofcare. In addition, incentives that may improve guideline-concordantcare should be strengthened.

(Am J Manag Care. 2005;11:426-432)

Referred to as "the captain of the ship," the physiciantraditionally has been the key agent indelivery of healthcare services.1 Many reforms infinancial and organizational incentives have beenimplemented to control healthcare expenditures andimprove quality of care by influencing physicians' practice.Analysts have been tracking how financial andorganizational incentives in the healthcare systemaffect physician practice for decades and they have documentedthat physicians' practice is related to theincentives in the payment system.2-15 Recent evidenceshows a decreasing trend, from 1997 to 2001, in thepercentage of physicians who were subject to reimbursementbased on profiling, patient satisfaction, orquality measures. In 2001, 17% of physicians reportedthat rates of preventive-services screening were used indetermining their compensation. In contrast, the percentageof physicians who are encouraged to followtreatment guidelines has increased.16

The impact of different types of reimbursement onphysician practices has been examined in some detail.The Institute of Medicine reported that payment incentivesare misaligned with the delivery of high-qualitycare.17 The methods of physician payment (eg, fee-for-service[FFS], salary, capitation) usually do not rewardgood patient health outcomes. For instance, FFS offersincentives for providing more services, whereas capitationrewards conserving resources. One can result inoveruse and the other in restricted use of resources.Although salary-based compensation does not necessarilyencourage underuse or overuse, it does not provideincentives for improved productivity or efficiency. Noneof the payment systems, unless used in conjunctionwith other strategies, provide incentives for high quality.In some cases, perverse incentives could rise againstquality improvement.17

Evidence shows that capitated physician groups putmore emphasis on monitoring overuse than underuse ofservices like immunization, which may be attributed tofinancial incentives of capitation.18 Others have foundthat physician incentives that are based on the physician'sown production (rather than the group) increasephysician productivity.11 Some financial-productivityincentives may discourage the delivery of preventivecare such as Pap smears and cholesterolchecks, but not mammogramsand flu shots.12

Clinical practice guidelineshave been developed for manychronic diseases to promote practicesthat are consistent with currentscientific understanding ofthe disease and treatment modalities,and to provide scientific guidancethat could lead to optimalpatient health outcomes. For sexuallytransmitted diseases (STDs),guidelines are primarily developedby the Centers for DiseaseControl and Prevention19,20 andthe US Preventive Services TaskForce.21 In California, state lawsand the California ChlamydiaAction Coalition22 have providedadditional practice guidelines. Incombination, these guidelines aredesigned to promote comprehensiveand effective STD care.Evidence suggests that productivity,quality, and cost-containmentincentives are associatedwith use of practice guidelines.13Self-reported data indicate thatfor more than 50% of physiciansstudied, treatment guidelines havea moderate to very large effect ontheir practice.16

Although practice guidelinespresent a potential solution to thecomplexity of medical decisions,23evidence of adherence to guidelinesfor various diseases has beendiscouraging.24-27 In addition,research on the impact of financialincentives on guideline adherenceis limited. A small-scalerandomized, controlled trial suggestedthat FFS physicians providedmore care and conformed topediatric care guidelines, whereas salaried physicianswere in less conformity with guidelines.28 However, thecurrent literature provides little information about theimpact of reimbursement (and the incentives reimbursementrepresents) on delivery of STD care.

In this study, we investigate the association betweenphysician compensation—independent of other determinantsof physician practice—and the delivery ofguideline-concordant STD care. The STD guidelines weexamined included taking a sexual history of the patientat the first nonurgent visit,20,22 annual screening of sexuallyactive females 15 to 25 years of age,20-22,29 providingchlamydia drugs for the partner's treatment orpatient-delivered partner therapy,22 and providing servicesto minors without parental notification or consent(also California State Law, Family Code §6926(a)).20


Data and Sample

Surveys of Primary Care Physicians (PCPs) contractedwith Medicaid HMOs in 2002 in 8 California countieswith the highest rates of chlamydia and Medicaid HMOenrollment were used for this study. The PCPs who participatedin the survey were contracted with a total of 25Medicaid HMOs in the selected counties. Three plansfolded early in the study period, and their PCPs either recontractedwith another HMO in the study or lost theirMedicaid HMO contracts. Two plans with fewer than10 000 enrollees each refused to participate in the study.An electronic version of the participating plans' PCPdirectory was obtained, and an unduplicated database ofall PCPs contracted with these HMOs was constructedand served as the sampling frame.

These PCPs were contacted by phone up to 12 timesfor a telephone interview from January through May2002 and were offered $75 to participate in the 15-minute survey. The choice of a self-administered surveywas offered to those PCPs who were unable to completethe interview by phone. The adjusted response rate was41% (948) following the methodology used in anothernational survey of physicians.30 Of the unduplicated listof physicians provided by participating HMOs, 64%(6096) were found to be ineligible primarily due to outdatedcontact information or contractual changes in thetime between the collection of the PCP list from HMOsand the fielding of the survey, and secondarily due tobeing specialists outside the scope of the study.Additional analysis of respondents and nonrespondentson the basis of available characteristics, including countyand specialty, did not identify any nonresponse biasin the sample. This study was approved by the appropriateinstitutional review board, and all study subjectsconsented to participate in the survey.

Dependent Variables

Primary care physician adherence to STD guidelineswas captured on a 5-point Likert scale ranging from 1 to5, with 1 representing "always," 2 representing "usually,"3 representing "sometimes," 4 representing "rarely,"and 5 representing "never." For the following analyses,all adherence variables were dichotomized into thosewho consistently (always, usually) followed a guidelineversus those who did not (sometimes, rarely, never).This decision was based on the assumption that adherenceto any practice guidelines often depends on thephysician judgment of the appropriateness of the treatmentor procedure given the presentation of illness,the patient's characteristics, and other circumstances.Thus, consistent adherence to guidelines can be appropriatelydefined as "always" and "usually" followingguidelines.

Independent Variables

The main independent variable was PCP paymentmechanism. Primary care physicians were asked toidentify whether they were salaried physicians of anHMO or a medical group. Those who were not salariedwere then asked whether they were reimbursed on acapitation or FFS basis by their affiliated health plan ormedical group. They also were asked whether they contracteddirectly with the health plan, or through themedical group that provided the largest proportion oftheir Medicaid HMO patients. Primary care physiciansalso were asked whether their contracts with their HMOsor medical groups included stipulations for reimbursementbased on their productivity (eg, number of visits),quality of care (eg, patient satisfaction or peer review),their management of utilization (eg, rate of referrals, laboratorytests, x-rays), or financial performance of thegroups (eg, profit sharing). Each PCP may have reportedmore than 1 type of reimbursement.

Nine dichotomous independent variables were createdto distinguish those PCPs reimbursed on an FFS, capitation,or salary basis and each of the 4 contractualstipulations or reimbursement mechanisms. The percentageof those reimbursed under FFS and any of the 4reimbursement mechanisms was too small for thesegroups to be separately identified (ranging between 5.6%to 3%). The remaining variables included the 2 paymentmethods (capitation and salary) crossed with the 4 reimbursementmechanisms (productivity, quality of care,management of utilization, and financial performance(Table 1). Many PCPs reported more than 1 reimbursementmechanism, so the resulting variables representmutually exclusive payment methods but overlappingreimbursement mechanisms. Therefore, the analyses ofinfluence of payment on PCP practice are interpreted,for example, as the influence of salary and productivityon PCP practice versus the influence of other paymentmethods.

A number of other factors that could affect PCPadherence to STD practice guidelines were controlled forin the logistic regression models. These included businesscharacteristics of PCPs (practice setting, volume ofMedicaid patients in practice, number of Medicaid HMOcontracts, and number of medical group contracts withMedicaid business), personal characteristics (sex, specialty,and years in practice), having STD guidelinesfrom the Centers for Disease Control and Prevention andUS Preventive Services Task Force, having ever receivedfeedback on STD screening from the contractedMedicaid HMO or medical group, and the type of contractedMedicaid managed care health plan (2-planmodel: 1 commercial and 1 local initiative plan for beneficiariesto choose from; county organized health system:an agency organized and operated by the county;and geographic managed care: capitated contractsbetween the state and multiple commercial plans for ageographic area).31

Analysis Methods


We examined the extent to which PCPs followedexisting STD guidelines given PCP reimbursement. Theassociation between PCPs' adherence to STD practiceguidelines and reimbursement (as well as betweenadherence and control factors) was assessed using chisquaretests of difference and reported at < .05. Therelationship between payment and adherence to STDpractice guidelines was assessed in a series of logisticregression models controlling for confounding factors.Each model was adjusted for clustering of PCPs withinHMOs, using STATA v.7.0.32 The analyses were notweighted otherwise because the sample frame includedthe universe of PCPs who contracted with the MedicaidHMOs in the selected counties.

Because of the cross-sectional nature of the data, wecannot accurately determine whether there is a causalrelationship between the payment-mechanism variablesand the outcomes. It is possible that physicians simultaneouslychoose their practice based on the paymentmechanisms used in that practice. Such physicians alsomay have characteristics that make them more or lesslikely to provide recommended STD care. For example,a physician who has a predisposition to follow STDguidelines may prefer to join a group that pays itsproviders on an FFS basis. Our data do not allow us todetermine whether it is the reimbursement variables,or alternatively, unmeasured characteristics of thephysician, that cause the physician to provide thegiven STD care.

To investigate this issue further, we conducted amultinomial logistic regression where payment mechanism(capitation, FFS, or salary) was the dependentvariable and various physician and practice characteristicswere the independent variables. Several of thesevariables were found to be statistically significant; togive a single example, physicians who graduated fewerthan 10 years ago were more likely to be salaried, and itis plausible that more recently trained physicians aremore likely to follow guidelines due to their familiaritywith current STD guidelines. Similarly, one mightexpect several unmeasured characteristics to have similarcorrelations. Ideally, one would use instrumentalvariablestechniques to form exogenous predictors ofpayment mechanisms, but the dataset used does notcontain the necessary variables that can predict paymentmechanism but are unrelated to the provision ofSTD care. As a result, the analysis below does not drawconclusions asserting that the payment mechanismshave a causal relationship with provision of care.Rather, only a relationship between the 2 sets of variablesis posited.


Sample Characteristics

The most frequent method of reimbursementreported was salary and quality of care (22%), followedby FFS (20%), salary and productivity (18%), salary andfinancial performance (18%), and capitation and managementof utilization (16%) (Table 1). The least commonlyused method was capitation and productivity(8%). A large proportion of PCPs (43%) reported seeing10 or fewer female (15-25 years old) Medicaid patientsper week, and a similarly high proportion (44%) reportedthat their practice consisted of 11% to 50% Medicaidpatients. About 2 in 5 (41%) were in solo practice, andless than half (48%) contracted with only 1 HMO or 1medical group (42%). Thirty-five percent of PCPs werefemale; 40% were family or general practitioners, 25%were internists, and 28% were pediatricians.

Forty-three percent had STD guidelines from theCenters for Disease Control and Prevention or the USPreventive Services Task Force. Twenty-one percenthad ever received feedback on their STD screeningpractices from their affiliated HMOs or medical groups.Most (69%) were affiliated with HMOs in counties withthe 2-plan Medicaid managed care model.

Guideline Adherence

Adherence to guidelines varied by the type of guideline.Primary care physicians most often reported consistentlyobtaining sexual history at the first nonurgentvisit (68%) and screening young females 15-19 (59%)and 20-25 (62%) years of age (Table 2). Primary carephysicians least often reported consistently providingchlamydia drugs for the partner's treatment (36%) or providingservices to minors without parental or guardiannotification or consent (48%).





The type of reimbursement was significantly associatedwith adherence to 2 guidelines. Those reimbursedunder salary and quality of care or salary and managementof utilization more often adhered to annualscreening of sexually active females aged 15-19 years(67%, < .05) than those reimbursed under other methods.Those reimbursed under capitation and quality ofcare more often consistently screened females aged 20-25 years for chlamydia annually (52%, < .05) thanthose reimbursed under other methods. Provision ofchlamydia drugs for the partner's treatment was moreconsistently done by PCPs who were reimbursed undercapitation and management of utilization (41%, < .05)or salary and management of utilization (45%, < .001)than those reimbursed under other methods.

Association Between Reimbursement Methodand Guideline Adherence





Some reimbursement mechanisms were related tophysicians' adherence to 2 guidelines, after accountingfor other confounders (Table 3). Salary and productivitywere associated with a higher likelihood of consistentchlamydia screening of sexually active females aged 15-19 years annually (odds ratio [OR] = 0.63, < .05),whereas salary and financial performance were associatedwith a lower likelihood of consistent chlamydiascreening of females aged 20-25 years annually (OR =0.43, < .001). Alternatively, the likelihood of providingchlamydia drugs for the partner's treatment was higher ifthe PCP was reimbursed through capitation and managementof utilization (OR = 1.63, < .05) or salary andmanagement of utilization (OR = 2.63, < .05). Overall,4 out of 40 reimbursement mechanisms examinedshowed statistically significant associations with guideline-concordant practices. Only 2 of the 40 reimbursement mechanisms would have been significant at the 5%level by chance.


In this study, no clear or consistent patterns emergedindicating a link between methods of PCP payment andPCP delivery of all STD care. Our results do suggest thatthere may be some associations between reimbursementand delivery of certain guideline-concordant STD services.Financial incentives imbedded in management of utilizationmay influence the PCP's decision to provide thepatient with chlamydia medication for the partner'streatment. This guideline is intended to curb the spreadof chlamydia infection and its costly complications inwomen through treating the partner, overcoming thenumerous barriers facing the partner. Treating the partnercan ensure that the patient is cured and will notreturn for additional visits or care because of reinfectionsand further complications. Curtailing repeated visitscan reduce rates of use of physician services, which isthe primary goal of management of utilization.

The financial incentives of salaried PCPs with productivityor financial-performance stipulations in theircontracts provide disincentives for the annual chlamydiascreening recommended by the guideline.Chlamydia testing requires longer appointments to discusssexual-risk history and possibly to collect a specimen,thereby incurring additional lab costs. Salary andproductivity goals could discourage such practices.

The lack of a clear association between reimbursementmechanisms and the outcome variables may bedue to the fact that physicians may contract with anumber of commercial and Medicaid HMOs and medicalgroups who may or may not encourage physicians toadhere to certain guidelines. In this study, we examinedthe relationship between guideline adherence and paymentby the HMO and medical groups that provided thelargest proportion of Medicaid patients to the physician'spractice. The collective impact of various reimbursementmechanisms may paint a different picture ofPCP adherence to STD guidelines.

Evidence is emerging about the positive impact ofperformance contracting on various patient outcomes,33,34 although we did not examine the effect ofsuch techniques on physicians' adherence to guidelines.However, factors such as multiple contracts maydilute the impact of incentives, and physicians' lack ofrecall of the existence of incentives from certain planscan reduce the effectiveness of such incentives.35Furthermore, monitoring physician performance canbe a costly proposition.36 Additional research is clearlynecessary to better understand the relationshipbetween reimbursement mechanisms and physicians'provision of guideline-concordant care or best practices.If reimbursement mechanisms indeed contradictguidelines, modifications of such mechanisms in PCPcontractual agreements are needed. Alternatively,reimbursement mechanisms that may jointly increasethe positive impact of best-practice guidelines can beincorporated in organizational quality improvementefforts to maximize their utility.


This study included only PCPs contracted withCalifornia's Medicaid HMOs and excluded PCPs whoprovided care to Medicaid patients outside the managedcare setting. Thus, the findings of this study areapplicable to Medicaid HMOs only and cannot be comparedwith FFS Medicaid. Medicaid HMO providers maydiffer from FFS Medicaid providers in their delivery ofSTD care, and California's Medicaid managed careproviders may differ from those in other states.Furthermore, all data were self-reported, and physicianshave been found to self-report guideline-concordantpractices at a consistent, but higher, rate than therate indicated by chart reviews.37,38 In addition, smallsample sizes limited our ability to draw further conclusionsregarding the potential impact of reimbursementon PCP adherence. Finally, as discussed earlier, causalitycannot be inferred from the multivariate analysisbecause physicians may self-select into practices thathave particular payment arrangements.

From the UCLA Center for Health Policy Research and the School of Public Health,University of California, Los Angeles, Calif (NP); Department of Health Services, theUniversity of California, Los Angeles (TR); Department of Health Policy and Management,Texas A&M University, College Station, Tex (MT-S); the Sexually Transmitted Disease ControlBranch, California Department of Health Services, Oakland, Calif (GB); and the Departmentof Epidemiology and Biostatistics, University of California, San Francisco, Calif (JN).This research was supported by the State of California (cooperative agreement numberH25/CCH904362-13), the Centers for Disease Control and Prevention (Comprehensive STDPrevention Systems Grant), and the California HealthCare Foundation.

Address correspondence to: Nadereh Pourat, PhD, Senior Research Scientist, UCLACenter for Health Policy Research, University of California, Los Angeles, 10911 WeyburnAve, Suite 300, Los Angeles, CA 90024. E-mail:

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