THE IMPACT OF FINANCIAL INCENTIVES ON PHYSICIAN BEHAVIOR IN MANAGED CARE PLANS - A REVIEW OF THE EVIDENCE

This review examines the relationship between the financial incentives confronting physicians in managed care plans and the utilization of s ervices. The primary conclusion of this review is that the financial i ncentives confronting physicians are a key element in explaining the l ower utilization rates of enrollees in managed care plans. However, th is conclusion is not definitive because it is based on studies that ar e subject to numerous sources of potential bias. To isolate the impact of financial incentives facing physicians on the performance of healt h plans, it is necessary to adjust for patient, physician, health plan , and market characteristics related to utilization, and most studies include little information about these characteristics.