NCPA - National Center for Policy Analysis

A Controversial Drug Payment Plan

September 23, 1999

Insurers are increasingly requiring physician groups to share the expense of providing prescription drugs. Under this controversial system, doctors agree to accept a flat monthly fee -- ranging from $9 to $15 per patient -- to be used to pay for medications used by the group of patients.

Insurers pay the fee regardless of whether the patients use no drugs at all that month, or if the total spending goes over the allotted fee. If prescription spending exceeds the monthly fee, the doctors lose money.

  • The system is designed to control rapidly rising drug spending, its advocates claim.
  • But bonuses, penalties and other financial incentives worry lawmakers, who say putting doctors at risk of losing money because they are writing prescriptions creates an ethical dilemma.
  • About one-third of health maintenance organizations say they offer these pharmacy risk-sharing contracts -- up from 24 percent in 1996.
  • The contracts are popular on the West Coast and becoming more accepted in the Midwest -- but resistance is reported in the Northeast.

Source: Julie Appleby, "Prescription for Problems," USA Today, September 23, 1999.


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