Health Care Around the World P4P Physician Compensation

P4P and Diabetes Care

In April 2006, Ontario instituted the Diabetes Management Incentive (DMI) that increased payments to physicians that provided high-quality diabetes care. Did the incentive improve payments quality?

According to a paper by Kantarevic and Kralj (2012), it turns out that the answer is yes, but the magnitude of the change depends on the type of physician. Ontario implemented new payment reforms which include an enhanced fee-for-service model (the Family Health Groups; FHG) and a blended capitation model (the Family Health Organizations; FHO). Physicians paid via a blended capitation were much more responsive to the DMI P4P program than those in the enhanced FFS. The authors claim that “this result implies that the optimal size of P4P incentives is negatively related to the degree of supply-side cost-sharing.” The result could also be due to better administrative management within FHOs relative to FHGs.

Institutional Background

Until the early 2000s, almost all primary care physicians in Ontario practiced in a traditional fee-for-service model. In response to long-standing criticisms of this model, the government sequentially introduced a variety of new payment models.  The common elements in these models include patient enrolment, extended hours and eligibility for a set of performance-based incentives, such as preventive care bonuses, special payments for providing targeted services, incentives to enrol patients with no regular family doctor and chronic disease management incentives. The main difference between the new models is in their base compensation, with two main options of fee-for-service and capitation. Currently, approximately 80% of primary care physicians participate in the various new payment models.


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