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Cost Containment and the Patient Protection and Affordable Care Act - page 17 / 30

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Physician incentives to over-provide care

Fee-for-service reimbursement => Quality-insensitive physicians and hospitals

When physicians and hospitals are paid more to do more, regardless of outcome, they’ll do more

Especially when they lose money on higher quality care (Urbina, NY Times, Jan. 11, 2006)

Example of clinic that switched from salary to commission on fees generated; doctors scheduled more appointments and ordered more blood tests and x-rays

Hemenway, 322 NEJM 1059 1990

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