Payment systems and incentives in dentistry

AbstractIn this commentary, we discuss the advantages and disadvantages of the following incentive‐based remuneration systems in dentistry: fee‐for‐service remuneration, per capita remuneration, a mixed payment system (a combination of fee‐for‐service remuneration and per capita remuneration) and pay‐for‐performance. The two latter schemes are fairly new in dentistry. Fee‐for‐service payments secure high quality, but lead to increased costs, probably due to supplier‐induced demand. Per capita payments secure effectiveness, but may lead to under‐treatment and patient selection. A mixed payment scheme produces results somewhere between over‐ and under‐treatment. The prospective component (the per capita payment) promotes efficiency, while the retrospective component (the fee‐for‐service payment) secures high quality of the care that is provided. A pay‐for‐performance payment scheme is specifically designed towards improvements in dental health. This is done by linking provider reimbursements directly to performance indicators measuring dental health outcomes and quality of the services. Experience from general health services is that pay‐for‐performance payment has not been very successful. This is due to significant design and implementation obstacles and lack of provider acceptance. A major criticism of all the incentive‐based remuneration schemes is that they may undermine the dentists’ intrinsic motivation for performing a task. This is a crowding‐out effect, which is particularly strong when monetary incentives are introduced for care that is cognitively demanding and complex, for example as in dentistry. One way in which intrinsic motivation may not be undermined is to introduce a fixed salary component into the remuneration scheme. Dentists would then be able to choose their type of contract according to their abilities and their preferences for nonmonetary rewards as opposed to monetary rewards. If a fixed salary component cannot be introduced into the remuneration scheme, the fees should be ‘neutral’; that is, they should just cover the costs of the services provided. This is one way in which supplier‐induced demand can be limited and costs contained.