Medicare introduced a new billing code that reimburses surgeons more for repairing hernias that are at least 3 cm long. As a result the percent of repaired hernias that were less than 3 cm dropped from 60% to 49%. It is probably not too hard for surgeons to justify this change. Probably surgeries on hernias just under 3 cm, are just as hard to do as surgeries on hernias that are just above 3 cm. So probably it seems arbitrarily unfair to reimburse more for the slightly larger ones. So look at the close calls closer until you find an angle where one that on first glance was less than 3 cm, now appears to be more than 3 cm.
On the other hand, consider the response when Blue Cross Blue Shield in Michigan offered to pay more to urology group practices that had more patients on active surveillance for prostate cancer. (A growing consensus suggests that most low-risk prostate cancer patients would be better off with active surveillance, rather than quick prostate surgery by urologists.) The response by Michigan urologists–no change in the percent of prostate cancer patients on active surveillance.
Why the difference? I suggest that surgeons, like other people, respond more to individual incentives than to group incentives. A person who responds to group incentives bears the costs themselves, but shares the benefits with others who may be free-riders. If the incentive is individual, no one free rides.
I became aware of the recent academic articles on how incentives do or don’t influence surgeons by reading:
The academic article showing that individual incentives matter to some surgeons is:
The academic article showing that group incentives don’t seem to matter to surgeons is: