The Effect of Capitation on Switching Primary Care Physicians

Objective To examine the relationship between patient case-mix, utilization, primary care physician (PCP) payment method, and the probability that patients switch their PCPs.

Data Sources/Study Setting Administrative enrollment and claims/encounter data for 1994–1995 from four physician organizations.

Study Design We developed a conceptual model of patient switching behavior, which we used to guide the specification of multivariate logistic analyses focusing on interactions between patient case-mix, utilization, and PCP reimbursement methods.

Data Collection/Extraction Methods Claims data were aggregated to the encounter level; a switch was defined as a change in PCP since the previous encounter. The PCPs were reimbursed on either a capitated or fee-for-service (FFS) basis.

Principal Findings Patients with stable chronic conditions (Ambulatory Diagnostic Groups [ADG] 10) and capitated PCPs were 36 percent more likely to switch PCPs than similar patients with FFS PCPs, controlling for patient age and sex and physician fixed effects. When the number of previous encounters was included in the model, this relationship was no longer significant. Instead high utilizers with capitated PCPs were significantly more likely to switch PCPs than were similar patients with FFS PCPs.

Conclusions A patient's demographics and utilization are associated with the probability that the patient will switch PCPs. Capitated PCP payment was associated with higher rates of switching among high utilizers of health care resources. These findings raise concerns about the continuity and quality of care experienced by vulnerable patients in an era of changing financial incentives.