BACKGROUND: The factors that determine dialysis modality selection and distribution are not well understood. Physician reimbursement incentives have been suggested to play an important role. Under the fee-for-service system in Ontario that existed prior to July 1998, nephrologists were paid about sevenfold more for a hemodialysis (HD) patient than for a patient on peritoneal dialysis (PD). However, since then, nephrologists have been reimbursed via a modality-independent capitation fee, whereby payment for any form of dialysis is the same. This was expected to markedly increase the use of PD. METHODS: When the capitation fee was introduced in 1998, a survey questionnaire of all Ontario nephrologists was done and repeated 3 years later (response rate 62.5%). Changes in dialysis modality incidence and prevalence rates in Ontario and in the rest of Canada were examined. RESULTS: On a scale of 1 to 7, nephrologists were convinced that the capitation fee was a good thing (mean rating 6.07); 75% said they had been seeing patients at every dialysis under the old system, compared to 41% now. Of significance, the proportion of prevalent patients on PD in Ontario declined from 27.3% in 1997 to 19.7% in 2000, increasing to 22.6% in 2002. Similarly, the incident PD rate seems to have stabilized, while the use of nonhospital-based HD has increased. CONCLUSIONS: Following the introduction of the capitation fee, PD use in Ontario continued to decline for 2 years, and then began to increase. In the rest of Canada, there are continuing declines in PD use. This is consistent with the hypothesis that the new incentives caused by the altered physician reimbursement are acting in a subtle way to increase PD and non-hospital-based HD. A longer period of observation may be required to assess the complete effect.

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