PacifiCare to link doctors, cost
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home / healthcare / in the media

The Orange County Register
Jan 16, 2002

by Bernard J. Wolfson

PacifiCare to link doctors, cost

SANTA ANA, Calif. _ PacifiCare of California plans next year to roll out new health-maintenance organizations in which members who choose "preferred" primary doctors will be rewarded with lower deductibles and co-payments.

The idea, still in the planning stages, is to attract HMO members to doctor groups that are rated by PacifiCare as the best performers.

PacifiCare already rates doctors on many criteria, including patient satisfaction; diagnostic and preventive measures; treatment of chronic diseases; and how well the doctor groups control spending on prescription drugs, injectables and hospital care.

Sam Ho, PacifiCare's chief medical officer, said the company will use these existing criteria _ and several new ones that it will share with other health plans _ as the basis for pricing the new HMOs.

Though details are not yet settled, Ho said PacifiCare is looking at two variations on this theme: an all-preferred HMO, including only the highest-rated doctors; and a two-tiered HMO in which members choosing the preferred doctors would have lower out-of-pocket costs than those choosing other physicians.

Moreover, employers who purchased a "preferred" HMO for their employees would see their premiums rise by considerably less than others, Ho said. PacifiCare is projecting HMO premium increases next year in the range of 14 percent to 18 percent. But companies that select a preferred HMO may well get increases beneath the low end of that range, he said.

"It looks like this is going to be very welcome in the marketplace," Ho said.

Last year, PacifiCare and a handful of other health plans incorporated two-tier hospital networks into their HMOs, offering lower rates to members who choose lower-cost hospitals.

Consumer advocates Tuesday expressed concern that PacifiCare's plan to differentiate among doctors might put more weight on cost control than on the quality of care they give to patients.

"It's hard to envision PacifiCare doing this if cost weren't a continuing factor," said Jamie Court, a health-care advocate with the Foundation for Taxpayer and Consumer Rights.

Patients will not benefit if they pay lower deductibles for doctors who keep costs down, he said. "Often, higher quality means higher expenditure on health care." Ho acknowledged that the preferred doctors would be more "cost-effective."

But PacifiCare's main concern, he said, is to take the case for doctor performance directly into the consumer marketplace.

PacifiCare is one of six major California HMOs participating in a new initiative, announced today, in which bonuses and other financial incentives for doctor groups will be based in part on a common set of criteria measuring quality of care and patient satisfaction.

"The flip side of tiered compensation for doctors is a tiered benefit plan" for members, Ho said.

Under the new shared "pay for performance" plan, sponsored by the Integrated Healthcare Association in Lafayette, about half of a doctor group's overall rating would be based on patient satisfaction and the other half on clinical measures of success in disease prevention and treatment.

Some long-time health-care observers worry that tying a doctor's pay to what their patients think of them may not be the most productive idea.

"It might look like a good idea on the surface, but I can tell you that patients are a lousy judge of good medicine," said Roger M. Farel, a retired Orange County family practitioner. Farel said patients are often angry with doctors who don't prescribe the drugs and other treatments they request. "This is going to make doctors pushers and purveyors of unnecessary procedures."

Bart Asner, chief executive officer of Monarch Healthcare, an Orange County doctors' group, agreed that "patient satisfaction needs to be coupled with appropriate patient expectations _ and the industry has not worked enough on that. . . . If the definition of patient satisfaction is 'My doctor gives me everything I want,' that does not help control costs or provide the best quality."

But Gifford Boyce-Smith, senior medical director for quality management at Blue Shield of California, said part of a doctor's grade in the new plan would be based on taking the time to communicate why patients don't need the drugs or procedures that they think they do.

"When the doctor is kind and skillfully communicates, I think a patient can accept that," he said.


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