Regulating the financial incentives facing physicians in managed care plans.

Recent accounts of enrolees in managed care plans being denied access to potentially lifesaving services have heightened public anxiety about the impact of managed care on the accessibility and appropriateness of care, and this anxiety has been translated into legislative action. The present review focuses on an area of managed care operations that has received considerable attention in state legistlatures and in Congress during the past 2 years: the financial relationship between managed care health plans and physicians. Twelve states now mandate that managed care plans disclose information about their financial relationship with physicians, and 11 states regulate the method used by managed care health plans to compensate physicians. Most laws that regulate methods of compensation prohibit health plans from providing physicians an inducement to reduce or limit the delivery of "medically necessary" services. Moreover, in 1996 the Health Care Financing Administration finalized its regulations governing the financial incentives facing physicians in plans that treat Medicaid or Medicare patients, and these regulations went into effect on January 1, 1997. These regulations also are examined in this study.