Behavioral Economics and Physician Compensation — Promise and Challenges

Health care organizations embracing new payment models may find that applying behavioral economics can boost the effect of new incentives. By creating more favorable decision-making environments, we can take advantage of cognitive biases to encourage high-value care. Medicare aims to apply alternative payment models to 50% of its fee-for-service payments by the end of 2018 — an important shift toward value-based health care. 1 The success of national payment reform, however, will depend on engaging clinicians in making better decisions in managing individual and population health. Many physician behaviors are well explained by “rational” economic models (e.g., fee-for-service reimbursement tends to promote well-compensated procedures), and revising incentives may drive changes in decision making, shifting our focus from volume to value. Provider organizations embracing alternative payment models may find that applying behavioral economics can boost the effect of new . . .