Abstract: 

We analyzed the relationship between prices paid to 30,549 general internal medicine physicians and the cost and quality of care for 769,281 commercially insured adults. The highest-price physicians were paid more than twice as much per service, on average, as the lowest-price physicians were. Total annual costs for patients of the highest-price physicians were $996 (20 percent) higher than costs for patients of the lowest-price physicians were, and this variation was not explained by differences in use. Physician prices were not associated with quality: Among physicians in the same hospital referral region, we did not find significant differences between patients of the highest-price physicians and patients of lowest-price physicians in the likelihood of experiencing an ambulatory care–sensitive hospitalization or being readmitted within thirty days of hospital discharge. There were also no differences between the highest- and lowest-price physicians for these quality outcomes for high-need patients. Policy makers need more information on the causes and consequences of the large disparities in prices paid to physicians.