After Medicare and Medicaid, the balance of income from professional services comes from private third-party health insurers, state and private worker’s compensation programs, military health plans (Champus), the Veterans Administration, automobile insurers, and the patients themselves. You or your group may have contracts with one or more of these entities that tie your payments to an agreed-upon conversion factor, or, less commonly, to a capitated rate.

In a capitated agreement, the physician or group agrees to accept a guaranteed payment for each member of the health plan each month. In return, the physician must provide services for the plan’s patients when indicated. Unlike fee-for-service medicine, under which the physician’s income depends on performing visits and procedural services, capitated payments completely change the incentives, such that doing less maximizes your income. After a brief flurry of interest in capitation as a way to control the growth in health care expenditures, beneficiaries began fighting back, demonstrating that in some cases health plans and physicians were withholding needed services.

Other than capitation, insurers offer a number of payment mechanisms in their contracts to compensate anesthesiologists for their services. Most use the anesthesia base, time, and modifier system. Recently, some payers have started using incentive payments to reward quality. Reducing unnecessary testing, minimizing cancellations, and administering antibiotics in a timely fashion are all things by which anesthesiologists can help reduce direct and indirect costs of care. To the extent that practices can quantify these accomplishments, they have an opportunity to earn these incentive payments.