The second main type of physician reimbursement is payment per case treated. This provides a strong incentive for physicians to provide FEWER services, given that the physician receives compensation on per-case basis, and pockets any leftover funds as profits not devoted to patient care. It substantially incentives physicians accepting healthier patients with less expensive medical conditions (Jacobs & Rapoport 2002: 150). However, for this reason and the lack of monitoring afforded by third parties regarding quality of care, the per case model is seldom used.

In the United Kingdom, physicians are paid a salary, rather than upon a per-service basis. They physician is encouraged to be a 'gatekeeper' in reducing fees, much as insurance agencies act as gatekeepers within the United States (Jacobs & Rapoport 2002: 150-151). The salary system is designed to incentivize providing patient care in a similar manner to all patients. It encourages physicians to evaluate treatments based upon patient need, rather than the likelihood of personally profiting from more expensive care. Although this system might seem to encourage physicians to provide the absolute minimum of service, in theory physicians cannot allow the quality of care to sink below a certain level. This salary model is designed to lower cost expenditures, which is deemed to be necessary under the UK's NHS (National Health System) (Gold 2011).

While the U.S. has resisted adopting many features of the NHS system, it has attempted to curtail the abuses of the fee-for-service system through the use of capitation, or a fee paid to a physician for patient participant in a health plan. This system, most frequently manifested in...

Health insurers and other third-parties must monitor excessive prescription of certain services under the fee-based system. In capitation, a flat fee is provided for every patient, regardless of his or her costs of service, and higher-cost patients are presumably balanced out by lower-cost patients who seek less frequent and less expensive treatment. The insurer monitors for quality of care rather than excessive costs per patient or overly frequent use (Jacobs & Rapoport 2002: 151). The problems of such an incentive method, however, have been frequently commented upon by individuals who allege that their healthcare providers deny them necessary services based upon a desire to reduce costs. The perfect balance between patient health optimization and cost containment in terms of incentivizing appropriate physician behavior has yet to be achieved, and remains a struggle.
Reference

Gold, Steve. (2011, May 11). How European nations run national health systems. The Guardian.

Retrieved June 2, 2011 at http://www.guardian.co.uk/healthcare-network/2011/may/11/european-healthcare-services-belgium-france-germany-sweden

Jacobs, Philip & John Rapoport. (2002). The economics of health and medical care. Aspen.

What is an HMO? (2011). Office of the Public Advocate. State of California.

Retrieved June 2, 2011 at http://www.opa.ca.gov/report_card/hmowhatis.aspx