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financial and organizational incentives have been
implemented to control healthcare expenditures and
improve quality of care by influencing physicians’ prac-
tice. Analysts have been tracking how financial and
organizational incentives in the healthcare system
affect physician practice for decades and they have doc-
umented that physicians’ practice is related to the
incentives in the payment system.2-15Recent evidence
shows a decreasing trend, from 1997 to 2001, in the
percentage of physicians who were subject to reim-
eferred to as “the captain of the ship,” the physi-
cian traditionally has been the key agent in
delivery of healthcare services.1Many reforms in
bursement based on profiling, patient satisfaction, or
quality measures. In 2001, 17% of physicians reported
that rates of preventive-services screening were used in
determining their compensation. In contrast, the per-
centage of physicians who are encouraged to follow
treatment guidelines has increased.16
The impact of different types of reimbursement on
physician practices has been examined in some detail.
The Institute of Medicine reported that payment incen-
tives are misaligned with the delivery of high-quality
care.17The methods of physician payment (eg, fee-for-
service [FFS], salary, capitation) usually do not reward
good patient health outcomes. For instance, FFS offers
incentives for providing more services, whereas capita-
tion rewards conserving resources. One can result in
overuse and the other in restricted use of resources.
Although salary-based compensation does not necessar-
ily encourage underuse or overuse, it does not provide
incentives for improved productivity or efficiency. None
of the payment systems, unless used in conjunction
with other strategies, provide incentives for high quali-
ty. In some cases, perverse incentives could rise against
Evidence shows that capitated physician groups put
more emphasis on monitoring overuse than underuse of
services like immunization, which may be attributed to
financial incentives of capitation.18Others have found
that physician incentives that are based on the physi-
cian’s own production (rather than the group) increase
physician productivity.11Some financial-productivity
incentives may discourage the delivery of preventive
Association Between Physician Compensation Methods
and Delivery of Guideline-Concordant STD Care:
Is There a Link?
Nadereh Pourat, PhD; Thomas Rice, PhD; Ming Tai-Seale, PhD;
Gail Bolan, MD; and Jas Nihalani, MPH
Objective: To examine the association between primary care
physician (PCP) reimbursement and delivery of sexually transmit-
ted disease (STD) services.
Study Design: Cross-sectional sample of PCPs contracted with
Medicaid managed care organizations in 2002 in 8 California
counties with the highest rates of Medicaid enrollment and
Methods: The association between physician reimbursement
methods and physician practices in delivery of STD services was
examined in multiple logistic regression models, controlling for a
number of potential confounders.
Results: Evidence of an association between reimbursement
based on management of utilization and the PCP practice of pro-
viding chlamydia drugs for the partner’s treatment was most appar-
ent. In adjusted analyses, physicians reimbursed with capitation
and a financial incentive for management of utilization (odds ratio
[OR] = 1.63) or salary and a financial incentive for management of
utilization (OR = 2.63) were more likely than those reimbursed
under other methods to prescribe chlamydia drugs for the partner.
However, PCPs least often reported they annually screened
females aged 15-19 years for chlamydia (OR = 0.63) if reimbursed
under salary and a financial incentive for productivity, or screened
females aged 20-25 years (OR = 0.43) if reimbursed under salary
and a financial incentive for financial performance.
Conclusion: Some physician reimbursement methods may
influence care delivery, but reimbursement is not consistently asso-
ciated with how physicians deliver STD care. Interventions to
encourage physicians to consistently provide guideline-concordant
care despite conflicting financial incentives can maintain quality of
care. In addition, incentives that may improve guideline-concor-
dant care should be strengthened.
(Am J Manag Care. 2005;11:426-432)
From the UCLA Center for Health Policy Research and the School of Public Health,
University of California, Los Angeles, Calif (NP); Department of Health Services, the
University of California, Los Angeles (TR); Department of Health Policy and Management,
Texas A&M University, College Station, Tex (MT-S); the Sexually Transmitted Disease Control
Branch, California Department of Health Services, Oakland, Calif (GB); and the Department
of Epidemiology and Biostatistics, University of California, San Francisco, Calif (JN).
This research was supported by the State of California (cooperative agreement number
H25/CCH904362-13), the Centers for Disease Control and Prevention (Comprehensive STD
Prevention Systems Grant), and the California HealthCare Foundation.
Address correspondence to: Nadereh Pourat, PhD, Senior Research Scientist, UCLA
Center for Health Policy Research, University of California, Los Angeles, 10911 Weyburn
Ave, Suite 300, Los Angeles, CA 90024. E-mail: firstname.lastname@example.org.
THE AMERICAN JOURNAL OF MANAGED CAREJULY 2005
VOL. 11, NO. 7THE AMERICAN JOURNAL OF MANAGED CARE
care such as Pap smears and cho-
lesterol checks, but not mammo-
grams and flu shots.12
Clinical practice guidelines
have been developed for many
chronic diseases to promote prac-
tices that are consistent with cur-
rent scientific understanding of
the disease and treatment modali-
ties, and to provide scientific guid-
ance that could lead to optimal
patient health outcomes. For sex-
ually transmitted diseases (STDs),
guidelines are primarily devel-
oped by the Centers for Disease
Control and Prevention19,20and
the US Preventive Services Task
Force.21In California, state laws
and the California Chlamydia
Action Coalition22have provided
additional practice guidelines. In
combination, these guidelines are
designed to promote comprehen-
sive and effective STD care.
Evidence suggests that produc-
tivity, quality, and cost-contain-
ment incentives are associated
with use of practice guidelines.13
Self-reported data indicate that
for more than 50% of physicians
studied, treatment guidelines have
a moderate to very large effect on
Although practice guidelines
present a potential solution to the
complexity of medical decisions,23
evidence of adherence to guide-
lines for various diseases has been
research on the impact of finan-
cial incentives on guideline adher-
ence is limited. A small-scale
randomized, controlled trial sug-
gested that FFS physicians provid-
ed more care and conformed to
pediatric care guidelines, whereas salaried physicians
were in less conformity with guidelines.28However, the
current literature provides little information about the
impact of reimbursement (and the incentives reim-
bursement represents) on delivery of STD care.
In this study, we investigate the association between
physician compensation—independent of other deter-
minants of physician practice—and the delivery of
guideline-concordant STD care. The STD guidelines we
examined included taking a sexual history of the patient
at the first nonurgent visit,20,22annual screening of sex-
ually active females 15 to 25 years of age,20-22,29provid-
ing chlamydia drugs for the partner’s treatment or
patient-delivered partner therapy,22and providing serv-
ices to minors without parental notification or consent
(also California State Law, Family Code §6926(a)).20
Table 1. Reimbursement and Other Characteristics of Primary Care
(Standard Error) Characteristic
Reimbursement method and criteria*
Capitation & quality of care
Capitation & productivity
Capitation & management of utilization
Capitation & financial performance
Salary & quality of care
Salary & productivity
Salary & management of utilization
Salary & financial performance
Number of female Medicaid patients aged 15-25 years seen per week
10 or fewer
11 to 25
26 or more
Percentage of patients who are on Medicaid
10 or fewer
11 to 50
More than 50
Only 1 Medicaid HMO contract
Number of medical groups that contract with Medicaid patients
No medical groups
1 medical group
2 or more medical groups
Practicing medicine for 10 years or fewer
Primary care physician specialty
Family or general practice
Has STD guidelines from CDC or USPSTF
Ever received feedback on STD screening from
Medicaid HMO/medical group
Medicaid plan type
County organized health system
Geographic managed care
CDC indicates Centers for Disease Control and Prevention; STD, sexually transmitted disease; USPSTF,
US Preventive Services Task Force.
*Not mutually exclusive.
Physician Compensation and STD Care
Data and Sample
Surveys of Primary Care Physicians (PCPs) contract-
ed with Medicaid HMOs in 2002 in 8 California counties
with the highest rates of chlamydia and Medicaid HMO
enrollment were used for this study. The PCPs who par-
ticipated in the survey were contracted with a total of 25
Medicaid HMOs in the selected counties. Three plans
folded early in the study period, and their PCPs either re-
contracted with another HMO in the study or lost their
Medicaid HMO contracts. Two plans with fewer than
10 000 enrollees each refused to participate in the study.
An electronic version of the participating plans’ PCP
directory was obtained, and an unduplicated database of
all PCPs contracted with these HMOs was constructed
and served as the sampling frame.
These PCPs were contacted by phone up to 12 times
for a telephone interview from January through May
2002 and were offered $75 to participate in the 15-
minute survey. The choice of a self-administered survey
was offered to those PCPs who were unable to complete
the interview by phone. The adjusted response rate was
41% (948) following the methodology used in another
national survey of physicians.30Of the unduplicated list
of physicians provided by participating HMOs, 64%
(6096) were found to be ineligible primarily due to out-
dated contact information or contractual changes in the
time between the collection of the PCP list from HMOs
and the fielding of the survey, and secondarily due to
being specialists outside the scope of the study.
Additional analysis of respondents and nonrespondents
on the basis of available characteristics, including coun-
ty and specialty, did not identify any nonresponse bias
in the sample. This study was approved by the appro-
priate institutional review board, and all study subjects
consented to participate in the survey.
Primary care physician adherence to STD guidelines
was captured on a 5-point Likert scale ranging from 1 to
5, with 1 representing “always,” 2 representing “usual-
ly,” 3 representing “sometimes,” 4 representing “rarely,”
and 5 representing “never.” For the following analyses,
all adherence variables were dichotomized into those
who consistently (always, usually) followed a guideline
versus those who did not (sometimes, rarely, never).
This decision was based on the assumption that adher-
ence to any practice guidelines often depends on the
physician judgment of the appropriateness of the treat-
ment or procedure given the presentation of illness,
the patient’s characteristics, and other circumstances.
Thus, consistent adherence to guidelines can be appro-
priately defined as “always” and “usually” following
The main independent variable was PCP payment
mechanism. Primary care physicians were asked to
identify whether they were salaried physicians of an
HMO or a medical group. Those who were not salaried
were then asked whether they were reimbursed on a
capitation or FFS basis by their affiliated health plan or
medical group. They also were asked whether they con-
tracted directly with the health plan, or through the
medical group that provided the largest proportion of
THE AMERICAN JOURNAL OF MANAGED CARE JULY 2005
Table 2. Proportion of Primary Care Physicians Who Always or Usually Report Following Guideline
Concordant STD Practices by Method of Reimbursement
Quality of Care
GuidelineTotal Management of Utilization
Obtain sexual history at first nonurgent visit*,†
68 (2)70 (7) 68 (8)71 (4)
Screen sexually active females aged 15-19 years for
59 (2)53 (5) 55 (4)53 (5)
Screen females aged 20-25 years for chlamydia annually*,†,‡,§
62 (2) 52||(4) 60 (3)57 (4)
Provide chlamydia drugs for partner’s treatment†,¶
36 (1) 39 (4)43 (8)41||(3)
Provide services to minors without parental/guardian
notification or consent*,¶
48 (3) 47 (5)52 (6) 43 (5)
*Centers for Disease Control and Prevention.
†California Chlamydia Action Coalition.
‡Health Employer Data Information Set.
§US Preventive Services Task Force.
VOL. 11, NO. 7 THE AMERICAN JOURNAL OF MANAGED CARE
their Medicaid HMO patients. Primary care physicians
also were asked whether their contracts with their HMOs
or medical groups included stipulations for reimburse-
ment based on their productivity (eg, number of visits),
quality of care (eg, patient satisfaction or peer review),
their management of utilization (eg, rate of referrals, lab-
oratory tests, x-rays), or financial performance of the
groups (eg, profit sharing). Each PCP may have reported
more than 1 type of reimbursement.
Nine dichotomous independent variables were creat-
ed to distinguish those PCPs reimbursed on an FFS, cap-
itation, or salary basis and each of the 4 contractual
stipulations or reimbursement mechanisms. The per-
centage of those reimbursed under FFS and any of the 4
reimbursement mechanisms was too small for these
groups to be separately identified (ranging between 5.6%
to 3%). The remaining variables included the 2 payment
methods (capitation and salary) crossed with the 4 reim-
bursement mechanisms (productivity, quality of care,
management of utilization, and financial performance
(Table 1). Many PCPs reported more than 1 reimburse-
ment mechanism, so the resulting variables represent
mutually exclusive payment methods but overlapping
reimbursement mechanisms. Therefore, the analyses of
influence of payment on PCP practice are interpreted,
for example, as the influence of salary and productivity
on PCP practice versus the influence of other payment
A number of other factors that could affect PCP
adherence to STD practice guidelines were controlled for
in the logistic regression models. These included busi-
ness characteristics of PCPs (practice setting, volume of
Medicaid patients in practice, number of Medicaid HMO
contracts, and number of medical group contracts with
Medicaid business), personal characteristics (sex, spe-
cialty, and years in practice), having STD guidelines
from the Centers for Disease Control and Prevention and
US Preventive Services Task Force, having ever received
feedback on STD screening from the contracted
Medicaid HMO or medical group, and the type of con-
tracted Medicaid managed care health plan (2-plan
model: 1 commercial and 1 local initiative plan for ben-
eficiaries to choose from; county organized health sys-
tem: an agency organized and operated by the county;
and geographic managed care: capitated contracts
between the state and multiple commercial plans for a
We examined the extent to which PCPs followed
existing STD guidelines given PCP reimbursement. The
association between PCPs’ adherence to STD practice
guidelines and reimbursement (as well as between
adherence and control factors) was assessed using chi-
square tests of difference and reported at P < .05. The
relationship between payment and adherence to STD
practice guidelines was assessed in a series of logistic
regression models controlling for confounding factors.
Each model was adjusted for clustering of PCPs within
HMOs, using STATA v.7.0.32The analyses were not
weighted otherwise because the sample frame included
the universe of PCPs who contracted with the Medicaid
HMOs in the selected counties.
Because of the cross-sectional nature of the data, we
cannot accurately determine whether there is a causal
relationship between the payment-mechanism variables
Percentage (Standard Error)
Quality of Care
Salary &Salary & Fee-for-
ServiceManagement of Utilization Financial Performance
73 (4)68 (7) 61 (8)73 (5)67 (5) 69 (2)
57 (4)67||(4)58 (3)67||(5)59 (5)55 (2)
58 (3) 66 (5)58 (4) 66 (6) 56 (5)63 (2)
38 (6)37 (4) 36 (6) 45#(4)33 (4) 37 (5)
42 (5)52 (5) 45 (3) 52 (6)52 (3)46 (2)
||The proportion is significantly different (P < .05) from those reimbursed by other methods.
¶California state law (permits providers to prescribe chlamydia drugs to the patient for partner’s treatment).
#The proportion is significantly different (P < .001) from those reimbursed by other methods.
Physician Compensation and STD Care
THE AMERICAN JOURNAL OF MANAGED CAREJULY 2005
and the outcomes. It is possible that physicians simul-
taneously choose their practice based on the payment
mechanisms used in that practice. Such physicians also
may have characteristics that make them more or less
likely to provide recommended STD care. For example,
a physician who has a predisposition to follow STD
guidelines may prefer to join a group that pays its
providers on an FFS basis. Our data do not allow us to
determine whether it is the reimbursement variables,
or alternatively, unmeasured characteristics of the
physician, that cause the physician to provide the
given STD care.
To investigate this issue further, we conducted a
multinomial logistic regression where payment mecha-
nism (capitation, FFS, or salary) was the dependent
variable and various physician and practice characteris-
tics were the independent variables. Several of these
variables were found to be statistically significant; to
give a single example, physicians who graduated fewer
than 10 years ago were more likely to be salaried, and it
is plausible that more recently trained physicians are
more likely to follow guidelines due to their familiarity
with current STD guidelines. Similarly, one might
expect several unmeasured characteristics to have sim-
ilar correlations. Ideally, one would use instrumental-
variables techniques to form exogenous predictors of
payment mechanisms, but the dataset used does not
contain the necessary variables that can predict pay-
ment mechanism but are unrelated to the provision of
STD care. As a result, the analysis below does not draw
conclusions asserting that the payment mechanisms
have a causal relationship with provision of care.
Rather, only a relationship between the 2 sets of vari-
ables is posited.
The most frequent method of reimbursement
reported was salary and quality of care (22%), followed
by FFS (20%), salary and productivity (18%), salary and
financial performance (18%), and capitation and man-
agement of utilization (16%) (Table 1). The least com-
monly used method was capitation and productivity
(8%). A large proportion of PCPs (43%) reported seeing
10 or fewer female (15-25 years old) Medicaid patients
per week, and a similarly high proportion (44%) report-
ed that their practice consisted of 11% to 50% Medicaid
patients. About 2 in 5 (41%) were in solo practice, and
less than half (48%) contracted with only 1 HMO or 1
medical group (42%). Thirty-five percent of PCPs were
female; 40% were family or general practitioners, 25%
were internists, and 28% were pediatricians.
Forty-three percent had STD guidelines from the
Centers for Disease Control and Prevention or the US
Preventive Services Task Force. Twenty-one percent
had ever received feedback on their STD screening
practices from their affiliated HMOs or medical groups.
Most (69%) were affiliated with HMOs in counties with
the 2-plan Medicaid managed care model.
Adherence to guidelines varied by the type of guide-
line. Primary care physicians most often reported con-
sistently obtaining sexual history at the first nonurgent
visit (68%) and screening young females 15-19 (59%)
and 20-25 (62%) years of age (Table 2). Primary care
physicians least often reported consistently providing
chlamydia drugs for the partner’s treatment (36%) or pro-
viding services to minors without parental or guardian
notification or consent (48%).
The type of reimbursement was significantly associ-
ated with adherence to 2 guidelines. Those reimbursed
under salary and quality of care or salary and manage-
ment of utilization more often adhered to annual
screening of sexually active females aged 15-19 years
(67%, P < .05) than those reimbursed under other meth-
ods. Those reimbursed under capitation and quality of
care more often consistently screened females aged 20-
25 years for chlamydia annually (52%, P < .05) than
those reimbursed under other methods. Provision of
chlamydia drugs for the partner’s treatment was more
consistently done by PCPs who were reimbursed under
capitation and management of utilization (41%, P < .05)
or salary and management of utilization (45%, P < .001)
than those reimbursed under other methods.
Association Between Reimbursement Method
and Guideline Adherence
Some reimbursement mechanisms were related to
physicians’ adherence to 2 guidelines, after accounting
for other confounders (Table 3). Salary and productivity
were associated with a higher likelihood of consistent
chlamydia screening of sexually active females aged 15-
19 years annually (odds ratio [OR] = 0.63, P < .05),
whereas salary and financial performance were associat-
ed with a lower likelihood of consistent chlamydia
screening of females aged 20-25 years annually (OR =
0.43, P < .001). Alternatively, the likelihood of providing
chlamydia drugs for the partner’s treatment was higher if
the PCP was reimbursed through capitation and manage-
ment of utilization (OR = 1.63, P < .05) or salary and
management of utilization (OR = 2.63, P < .05). Overall,
4 out of 40 reimbursement mechanisms examined
showed statistically significant associations with guide-
line-concordant practices. Only 2 of the 40 reimburse-
VOL. 11, NO. 7 THE AMERICAN JOURNAL OF MANAGED CARE
ment mechanisms would have been significant at the 5%
level by chance.
In this study, no clear or consistent patterns emerged
indicating a link between methods of PCP payment and
PCP delivery of all STD care. Our results do suggest that
there may be some associations between reimbursement
and delivery of certain guideline-concordant STD servic-
es. Financial incentives imbedded in management of uti-
lization may influence the PCP’s decision to provide the
patient with chlamydia medication for the partner’s
treatment. This guideline is intended to curb the spread
of chlamydia infection and its costly complications in
women through treating the partner, overcoming the
numerous barriers facing the partner. Treating the part-
ner can ensure that the patient is cured and will not
return for additional visits or care because of reinfec-
tions and further complications. Curtailing repeated vis-
its can reduce rates of use of physician services, which is
the primary goal of management of utilization.
The financial incentives of salaried PCPs with pro-
ductivity or financial-performance stipulations in their
contracts provide disincentives for the annual chlamy-
dia screening recommended by the guideline.
Chlamydia testing requires longer appointments to dis-
cuss sexual-risk history and possibly to collect a speci-
men, thereby incurring additional lab costs. Salary and
productivity goals could discourage such practices.
The lack of a clear association between reimburse-
ment mechanisms and the outcome variables may be
due to the fact that physicians may contract with a
number of commercial and Medicaid HMOs and medical
groups who may or may not encourage physicians to
adhere to certain guidelines. In this study, we examined
the relationship between guideline adherence and pay-
ment by the HMO and medical groups that provided the
largest proportion of Medicaid patients to the physi-
cian’s practice. The collective impact of various reim-
bursement mechanisms may paint a different picture of
PCP adherence to STD guidelines.
Evidence is emerging about the positive impact of
performance contracting on various patient out-
Table 3. Multiple Logistic Regressions of Primary Care Providers’ Practices Regarding Sexually Transmitted
Diseases in Medi-Cal Managed Care
Odds Ratio (95% Confidence Interval)
Aged 15-19 Years
Aged 20-25 Years
Services to Minors
quality of care
Salary & quality
Salary & manage-
ment of utilization
Salary & financial
0.99 (0.60, 1.63)
0.93 (0.42, 2.04)
0.96 (0.58, 1.59)
0.64 (0.34, 1.21)
1.32 (0.55, 3.15)
0.67 (0.29, 1.52)
0.59 (0.30, 1.15)
1.52 (0.46, 4.98)
0.75 (0.50, 1.10)
1.16 (0.51, 2.67)
1.19 (0.69, 2.05)1.32 (0.65, 2.72)0.87 (0.43, 1.75)0.93 (0.49, 1.77) 1.69 (0.92, 3.10)
1.30 (0.88, 1.92) 1.10 (0.62, 1.94) 0.96 (0.42, 2.22) 1.63* (1.08, 2.45)0.75 (0.35, 1.60)
1.26 (0.76, 2.09) 1.26 (0.87, 1.83)1.31 (0.73, 2.33)0.88 (0.43, 1.82)0.75 (0.49, 1.16)
0.65 (0.28, 1.54)0.63* (0.40, 0.99) 1.33 (0.78, 1.65) 1.06 (0.38, 2.98) 0.58 (0.28, 1.21)
0.99 (0.37, 2.69)1.45 (0.66, 3.15) 1.37 (0.50, 3.74) 0.78 (0.51, 1.20)1.10 (0.57, 2.15)
2.00 (0.68, 5.90) 1.34 (0.72, 2.49)1.08 (0.41, 2.83) 2.63* (1.20, 5.77)1.22 (0.73, 2.06)
1.37 (0.82, 2.27) 0.75 (0.46, 1.21) 0.43†(0.30, 0.62) 0.70 (0.38, 1.26) 1.27 (0.67, 2.42)
16% 28% 35% 7% 24%
*P < .05.
†P < .001.
Physician Compensation and STD Care
432 Download full-text
THE AMERICAN JOURNAL OF MANAGED CAREJULY 2005
comes,33,34although we did not examine the effect of
such techniques on physicians’ adherence to guide-
lines. However, factors such as multiple contracts may
dilute the impact of incentives, and physicians’ lack of
recall of the existence of incentives from certain plans
can reduce the effectiveness of such incentives.35
Furthermore, monitoring physician performance can
be a costly proposition.36Additional research is clearly
necessary to better understand the relationship
between reimbursement mechanisms and physicians’
provision of guideline-concordant care or best prac-
tices. If reimbursement mechanisms indeed contradict
guidelines, modifications of such mechanisms in PCP
contractual agreements are needed. Alternatively,
reimbursement mechanisms that may jointly increase
the positive impact of best-practice guidelines can be
incorporated in organizational quality improvement
efforts to maximize their utility.
This study included only PCPs contracted with
California’s Medicaid HMOs and excluded PCPs who
provided care to Medicaid patients outside the man-
aged care setting. Thus, the findings of this study are
applicable to Medicaid HMOs only and cannot be com-
pared with FFS Medicaid. Medicaid HMO providers may
differ from FFS Medicaid providers in their delivery of
STD care, and California’s Medicaid managed care
providers may differ from those in other states.
Furthermore, all data were self-reported, and physi-
cians have been found to self-report guideline-concor-
dant practices at a consistent, but higher, rate than the
rate indicated by chart reviews.37,38In addition, small
sample sizes limited our ability to draw further conclu-
sions regarding the potential impact of reimbursement
on PCP adherence. Finally, as discussed earlier, causal-
ity cannot be inferred from the multivariate analysis
because physicians may self-select into practices that
have particular payment arrangements.
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