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September 8, 1993

Fee-for-Time System: A Conceptual Framework for an Incentive-Neutral Method of Physician Payment

Author Affiliations

From the Departments of Community Health and Medicine (Dr Wachtel) and the Department of Medicine (Dr Stein), Brown University, Providence, RI; and the Division of Geriatrics (Dr Wachtel) and the Division of General Internal Medicine (Dr Stein), Rhode Island Hospital, Providence.

JAMA. 1993;270(10):1226-1229. doi:10.1001/jama.1993.03510100076036

SHOULD physicians be paid for anything but their time? The two prevailing modes of physician reimbursement, fee for service and capitation, do not pay physicians solely for their time; therefore, these modes create financial incentives that may affect physician behavior.1,2 Salary, the third method of physician payment, is less prevalent in the United States.

During the past 50 years, the financial incentives that drive the usual (or prevailing), customary, and reasonable fee-for-service method of physician payment have led to inflated charges with substantial distortions among physician specialties and for various services.3 The resource-based relative value scale (RBRVS) was created for Medicare to establish an alternative, fair, and equitable fee-for-service physician payment system.4-6 The RBRVS bases physician reimbursement on five factors, or resource inputs, that describe a service. One of these factors is patient contact time. The other factors are preservice and postservice time, intensity per unit of

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