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Link Between Pay For Performance Incentives And Physician Payment Mechanisms: Evidence From The Diabetes Management Incentive In Ontario

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  • Jasmin Kantarevic
  • Boris Kralj

Abstract

Pay for performance (P4P) incentives for physicians are generally designed as additional payments that can be paired with any existing payment mechanism such as a salary, fee‐for‐services and capitation. However, the link between the physician response to performance incentives and the existing payment mechanisms is still not well understood. In this article, we study this link using the recent primary care physician payment reform in Ontario as a natural experiment and the Diabetes Management Incentive as a case study. Using a comprehensive administrative data strategy and a difference‐in‐differences matching strategy, we find that physicians in a blended capitation model are more responsive to the Diabetes Management Incentive than physicians in an enhanced fee‐for‐service model. We show that this result implies that the optimal size of P4P incentives vary negatively with the degree of supply‐side cost‐sharing. These results have important implications for the design of P4P programs and the cost of their implementation. Copyright © 2012 John Wiley & Sons, Ltd.

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  • Jasmin Kantarevic & Boris Kralj, 2013. "Link Between Pay For Performance Incentives And Physician Payment Mechanisms: Evidence From The Diabetes Management Incentive In Ontario," Health Economics, John Wiley & Sons, Ltd., vol. 22(12), pages 1417-1439, December.
    • Handle: RePEc:wly:hlthec:v:22:y:2013:i:12:p:1417-1439
    DOI: 10.1002/hec.2890
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    Cited by:

    1. Ugolini, Cristina & Lippi Bruni, Matteo & Leucci, Anna Caterina & Fiorentini, Gianluca & Berti, Elena & Nobilio, Lucia & Moro, Maria Luisa, 2019. "Disease management in diabetes care: When involving GPs improves patient compliance and health outcomes," Health Policy, Elsevier, vol. 123(10), pages 955-962.
    2. Jillian Chown, 2020. "Financial Incentives and Professionals’ Work Tasks: The Moderating Effects of Jurisdictional Dominance and Prominence," Organization Science, INFORMS, vol. 31(4), pages 887-908, July.
    3. Kantarevic, Jasmin & Kralj, Boris, 2014. "Risk selection and cost shifting in a prospective physician payment system: Evidence from Ontario," Health Policy, Elsevier, vol. 115(2), pages 249-257.
    4. Matteo Lippi Bruni & Cristina Ugolini & Rossella Verzulli & Anna Caterina Leucci, 2023. "The impact of Community Health Centers on inappropriate use of emergency services," Health Economics, John Wiley & Sons, Ltd., vol. 32(2), pages 375-394, February.
    5. Brosig-Koch, Jeannette & Kairies-Schwarz, Nadja & Kokot, Johanna, 2014. "Sorting into Physician Payment Schemes – A Laboratory Experiment," Ruhr Economic Papers 529, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Kong, Nancy & Dulleck, Uwe & Jaffe, Adam B. & Sun, Shupeng & Vajjala, Sowmya, 2023. "Linguistic metrics for patent disclosure: Evidence from university versus corporate patents," Research Policy, Elsevier, vol. 52(2).
    7. Nadja Kairies-Schwarz & Claudia Souček, 2020. "Performance Pay in Hospitals: An Experiment on Bonus–Malus Incentives," IJERPH, MDPI, vol. 17(22), pages 1-29, November.
    8. Iezzi, Elisa & Lippi Bruni, Matteo & Ugolini, Cristina, 2014. "The role of GP's compensation schemes in diabetes care: Evidence from panel data," Journal of Health Economics, Elsevier, vol. 34(C), pages 104-120.
    9. Monica Giancotti & Giorgia Rotundo & Paolo Misericordia & Silvestro Scotti & Milena Lopreite & Marianna Mauro, 2018. "Preliminary investigation into general practitioners? willingness to accept the pay-for-performance scheme: A replication study," MECOSAN, FrancoAngeli Editore, vol. 2018(106), pages 65-92.
    10. Strumpf, Erin & Ammi, Mehdi & Diop, Mamadou & Fiset-Laniel, Julie & Tousignant, Pierre, 2017. "The impact of team-based primary care on health care services utilization and costs: Quebec’s family medicine groups," Journal of Health Economics, Elsevier, vol. 55(C), pages 76-94.
    11. L. F. Andrade & T. Rapp & C. Sevilla-Dedieu, 2018. "Quality of diabetes follow-up care and hospital admissions," International Journal of Health Economics and Management, Springer, vol. 18(2), pages 153-167, June.
    12. Jeannette Brosig-Koch & Nadja Kairies-Schwarz & Johanna Kokot, 2014. "Sorting into Physician Payment Schemes – A Laboratory Experiment," Ruhr Economic Papers 0529, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. Ammi, Mehdi & Fortier, Grant, 2017. "The influence of welfare systems on pay-for-performance programs for general practitioners: A critical review," Social Science & Medicine, Elsevier, vol. 178(C), pages 157-166.
    14. Adolf Kwadzo Dzampe & Shingo Takahashi, 2024. "Financial incentives and health provider behaviour: Evidence from a capitation policy in Ghana," Health Economics, John Wiley & Sons, Ltd., vol. 33(2), pages 333-344, February.
    15. Laberge, Maude & Wodchis, Walter P. & Barnsley, Jan & Laporte, Audrey, 2017. "Hospitalizations for ambulatory care sensitive conditions across primary care models in Ontario, Canada," Social Science & Medicine, Elsevier, vol. 181(C), pages 24-33.
    16. Nadine Chami & Arthur Sweetman, 2019. "Payment models in primary health care: A driver of the quantity and quality of medical laboratory utilization," Health Economics, John Wiley & Sons, Ltd., vol. 28(10), pages 1166-1178, October.
    17. Mehdi Ammi & Christine Peyron, 2016. "Heterogeneity in general practitioners’ preferences for quality improvement programs: a choice experiment and policy simulation in France," Health Economics Review, Springer, vol. 6(1), pages 1-11, December.
    18. Thaksha Thavam & Rose Anne Devlin & Amardeep Thind & Gregory S. Zaric & Sisira Sarma, 2020. "The impact of the diabetes management incentive on diabetes-related services: evidence from Ontario, Canada," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(9), pages 1279-1293, December.
    19. Brigitte Dormont & Aimée Kingsada & Anne-Laure Samson, 2021. "The Introduction of Pay-for-Performance: What Impact on General Practitioners' Activity in France?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 524-525, pages 11-29.
    20. Clémence Bussière & Nicolas Sirven & Thomas Rapp & Christine Sevilla‐Dedieu, 2020. "Adherence to medical follow‐up recommendations reduces hospital admissions: Evidence from diabetic patients in France," Health Economics, John Wiley & Sons, Ltd., vol. 29(4), pages 508-522, April.
    21. Rong Fu & Yichen Shen & Haruko Noguchi, 2021. "The best of both worlds? The economic effects of a hybrid fee‐for‐service and prospective payment reimbursement system," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 505-524, March.
    22. Vu, Thyna & Anderson, Kelly K. & Devlin, Rose Anne & Somé, Nibene H. & Sarma, Sisira, 2021. "Physician remuneration schemes, psychiatric hospitalizations and follow-up care: Evidence from blended fee-for-service and capitation models," Social Science & Medicine, Elsevier, vol. 268(C).
    23. Jeannette Brosig‐Koch & Nadja Kairies‐Schwarz & Johanna Kokot, 2017. "Sorting into payment schemes and medical treatment: A laboratory experiment," Health Economics, John Wiley & Sons, Ltd., vol. 26(S3), pages 52-65, December.
    24. repec:zbw:rwirep:0529 is not listed on IDEAS
    25. Zhang, Xue & Sweetman, Arthur, 2018. "Blended capitation and incentives: Fee codes inside and outside the capitated basket," Journal of Health Economics, Elsevier, vol. 60(C), pages 16-29.

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    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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