One HMO's New Prescription
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home / healthcare / in the media

CBS Evening News
Jul 10, 2001

One HMO's New Prescription

California Blue Cross Unit Will Base Bonuses On Patient Satisfaction
A major California insurer said Tuesday it would base the bonuses it pays doctors on patient satisfaction rather than cost-cutting, a move that could spur industry-wide change.

The move by Blue Cross of California, a unit of WellPoint Health Networks Inc. of Thousand Oaks, California, comes as lawmakers and patients rights activists press for more responsive HMOs, which have come under fire for putting profits ahead of patient care.

Blue Cross, like most HMOs, had based it's doctors' bonuses on how low they kept their budgets, encouraging less testing and shorter office visits, reports CBS News Correspondent Sandra Hughes.

Critics said that created a distorted incentive, keeping patients from more expensive care.

The changes make Blue Cross of California the first HMO in the nation to link physician bonus payments exclusively to patient care instead of the industry's traditional focus on cost control, the company said.

"We think this is an important step in the right direction for high quality accountable healthcare in California," said Dr. Tom Rosenthal, director of the Medical Group at UCLA.

Praise abounded for the idea but so do questions about the HMO's change of heart. Patients' advocates say it's the threat of a federal patient's bill of rights allowing HMO members to sue.

"It's clearly an attempt by the HMO industry to derail HMO reform; to basically say, we're going to reform ourselves so we don't need Congress to act or the president to sign the bill," said advocate Jamie Court.

Blue Cross officials also said the reform announced Tuesday had been underway for several years, before the patients' rights bill appeared likely to pass.

Even so, Blue Cross of California officials said that public pressure for reform had changed the competitive landscape for HMOs, saying other programs could be now forced to follow its lead.

"I think the world has changed and both employers and consumers are looking for more value for the dollar spent on premiums, and this was a way to shift the balance to the physician-patient relationship rather than put the emphasis, as it may have been in the past, on cost issues," said Michael Belman, medical director of Blue Cross of California.

But Alan Steinberg, who wrote a book on HMOs, calls the move a smokescreen, charging HMOs will still pay doctors a low fee per patient whether they are satisfied on not.

"I don't think Blue Cross has changed their stripes at all," Steinberg said. "They want to make money, and they want to make the most money they can."

Blue Cross and its physicians disagree, claiming a happy patient is easier to treat.

Long time HMO patient David Santiago said for years he felt like his doctors were in a hurry to get rid of him. Now he's hopeful that will change.

"It seemed like you pay your co-pay, you get a minute with the doctor, and (they) move on to their next patient," he said. "It seems like it's getting better, and I hope it'll get better in the future."

Under its new program, Blue Cross will survey about 10 percent of the 1.5 million California members covered under its HMO plan each year about the quality of the care they receive.

Up to 10 percent of the compensation paid to physicians will be a bonus based on patient satisfaction and the effectiveness of the treatment they provide, the company said.

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