Fee-for-Service Health Maintenance Organizations

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Abstract
COST containment is now the nation's overriding priority in the issue of health care. The continuing increase in the percentage of gross national product devoted to health care and the continued stresses on state and federal budgets combine to ensure that the demand for effective control of health care costs will persist and probably escalate.1 For the first time, the appropriate national allocation of expenses for medical diagnostic and treatment procedures is being seriously weighed against other pressing economic needs. The term "rationing" is being used increasingly in discussions of health care. Physicians' orders directly or indirectly account for some 70% of health care costs2 and are, therefore, a logical focus of attempts to contain costs. Traditional insurance programs have failed to engage physicians, through direct financial incentives, in the difficult but necessary process of scrutinizing the massive expenditures they initiate. Traditional insurance programs have encouraged high-cost services

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