How primary care doctors are paid affects quality in Medicaid MCOs

A review of outcomes data for Medicaid participants enrolled in managed care organizations (MCOs) suggests that financial incentives may affect the preventive care that primary care physicians (PCPs) provide to enrollees.

The lead author, Troy Quast, PhD, an assistant professor of economics at Sam Houston State University in Huntsville, Texas, and other researchers compared two ways MCOs paid their physicians: capitation and fee for service.

They examined well-child visits and the prescribing of asthma medication.

"When compared to enrollees in MCOs that paid capitated rates, enrollees in MCOs that paid on a fee-for-service basis are more likely to [make] well-child visits and less likely to receive a prescription for asthma medication, if they were diagnosed with asthma."

Enrollees in MCOs that use a fee schedule are also less likely than members of capitated plans to receive services for which the PCPs do not receive direct compensation.

MCOs operate in different ways, and those differences can have an effect on the care that the enrollees receive, says Quast. "There's a push by policymakers that encourages Medicaid enrollees to join managed care, but it's important that policymakers are sure MCOs benefit the patient."

Estimated probability of an enrollee receiving a service in a fee-for-service plan vs. a capitated plan

Note: Percentages are based on regression analysis, not percentages across the two MCO types.
Source: Quast, T. et al. Does the quality of care in Medicaid MCOs vary with the form of physician compensation? 2007. Health Econ. Accepted May 24 [in press].

Career Opportunities

HAP, a subsidiary of Henry Ford Health System, is a nonprofit health plan providing coverage to individuals, companies and organizations. This executive develops strategies to meet membership and revenue targets through products, pricing, market segmentation and advertising.  Aligns business among Business Development, Commercial Sales, Medicare and Public Sector Programs and Product Development. Seeks to enhance and be responsible for business development and expansion through the development of an effective product portfolio, strong interpersonal relationships and service excellence.

Apply via email to or online at

Subscribe to Our Newsletters

Monthly table of contents

Be notified as each issue of Managed Care is available online.

Biweekly newsletter

Recent topics have included:

PTCommunity news

New drug approvals, clinical trials, drug management. Three times per week.


Managed Care
By Peter Wehrwein
Managed Care
By Howard Wolinsky