Fee-for-service associated with a significantly higher rate of cataract surgery

Dec 13 2005

A system in which physicians are reimbursed for each procedure they perform (fee-for-service) is associated with a significantly higher rate of cataract surgery and related surgical costs, compared to a system in which physicians receive a lump sum for each patient they manage (contact capitation), according to a study in the December issue of Archives of Ophthalmology.

A variety of studies have evaluated the influence of physician incentive and reimbursement systems on the provision of services. Many of those studies have evaluated practice patterns in the primary care setting, and the majority of them confirmed expectations that financial incentives to provide less care result in decreased hospitalization, resource use, and costs, although not universally, according to background information in the article. Under the fee-for-service (FFS) system, physicians are reimbursed for each procedure, and under the contact capitation (CC) system, physicians are provided a lump sum for each patient they manage.

William Shrank, M.D., MSHS, who was with the Veterans Affairs Greater Los Angeles Health Care System at the time of the research, and colleagues compared the effects of FFS and CC on cataract extraction rates and costs. (Dr. Shrank is now with Brigham and Women's Hospital, Harvard Medical School, Boston.) The researchers analyzed claims and other data for an average of 91,473 commercial beneficiaries and 14,084 Medicare beneficiaries receiving eye care from a network of ophthalmologists and optometrists in St. Louis, Mo., between 1997 and 1998. The rate of cataract extractions per 1,000 beneficiaries, the costs of cataract procedures, the rates of non-cataract procedures, and the level of professional reimbursement for providers were compared during the final six months of FFS physician reimbursement and the first six months of CC.

"Compared with fee-for-service, contact capitation reimbursement was associated with significant decreases in cataract extraction rates and costs," the authors report.

"Both commercial and Medicare beneficiaries were approximately one half as likely to have cataract extraction under contact capitation as compared with fee-for-service," they write. "Professional reimbursement increased by eight percent whereas facility fees for cataract procedures decreased by approximately 45 percent."

The study also found that cataract surgical rates decreased more dramatically than other ophthalmologic procedures after implementing CC.

"Cataract surgery is almost always an elective procedure, can be performed quickly with few complications, and the exact timing of surgery is subject to both the surgeon's judgment and influence," the authors write. "The finding that cataract surgery was more responsive to reimbursement methodology than other procedures supports the hypothesis that elective procedures are more responsive to physician incentives than non-elective procedures."

"As enthusiasm for linking physician reimbursement to the quality of care grows, more health plans will likely use quality standards to reward physicians in addition to a baseline of either FFS or fixed-payment methodologies," they conclude. "More study is needed to evaluate the relationship between costs, quality, and combinations of physician reimbursement incentives and methodologies."

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