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home / healthcare / in the media

Sacramento Bee
Jan 16, 2002

by Lisa Rapaport

Bonus pay tied to patient care

Six health plans are set to assess medical groups for their service quality and to reward good ones.
Six California health plans Tuesday unveiled a joint venture to pay bonuses to physician groups based on patient satisfaction and quality of care.

Dubbed "pay for performance," the plan calls on insurers to develop a common scorecard measuring how well medical groups treat patients. The insurers will then offer financial incentives to groups that earn high marks.

If it works, the initiative could prove an invaluable consumer tool, replacing a host of conflicting quality reports with a single database that makes it simple for patients to figure out which medical group in their community can best meet their specific health care needs.

Details, such as what to measure and how much to pay, are still being hammered out. But the six plans -- Aetna, Blue Cross of California, Blue Shield of California, CIGNA, Health Net and Pacificare -- are committed to having standards and rewards in place by 2003.

"In an otherwise highly competitive marketplace, where health plans naturally want to differentiate themselves, these plans have seen this as the right thing to do," said Beau Carter, executive director of the Integrated Healthcare Association, a statewide group active in health policy and managed-care issues.

Absent specifics, patient advocates and doctors hailed the universal scorecard as a novel, long overdue concept but worried that the data might not be reliable. They also questioned whether the bonuses would really add up to more revenues for medical groups.

That's because many physician groups still get paid a flat monthly fee for each patient in a system known as capitation, which, according to managed- care critics, forces doctors to make treatment choices based on cost, not quality.

"A small bonus paid by HMOs to physicians for quality indicators will not negate the fact that 100 percent of physician pay outside of the bonus is still based on the premise of paying doctors more money for providing less medical care to patients," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights.

To be sure, health plans have their own take on what the bonus pay means.

Blue Cross of California, which announced its own version of performance pay last summer, said it will not be paying medical groups more money, said spokesman Michael Chee. It's simply changing the criteria.

"You could always qualify for up to a 10 percent bonus," Chee said. "It used to be we'd look at cost containment, and now it's quality outcomes."

By contrast, Pacificare will use incremental increases in capitation rates to reward quality, said Sam Ho, corporate medical director for the health plan.

"High performing groups will get an increase of between 4 and 7 percent in their capitation rates in addition to whatever increases they already had in the contract," Ho said.

Over time, Pacificare plans to extend the financial incentive system to consumers by, for example, offering lower physician visit fees to patients who sign up with higher quality medical groups and higher fees for patients who are treated by lower-rated groups.

"I think doctors and medical groups have been shielded from consumer demands for too long, and anything that helps consumers make informed choices will be good for the marketplace," Ho said.

For health care providers, any move to a more uniform system is welcome. For the past several years, Sacramento-area medical groups have strained to comply with health plans' conflicting requests for quality data, said Gary Fields, medical director of Sutter Physicians Alliance, which is responsible for roughly 150,000 managed-care patients treated by Sutter Medical Group, Sutter West Medical Group, and Sutter Independent Physician Association.

Most plans want data on the same chronic diseases but ask for different information, creating an administrative nightmare, Fields said.

"Right now, they all want to know about diabetes, but one plan wants to know how often we do retina exams, another a wants data on glucose levels, and another needs to know how often we check their feet for circulation and infections," Fields said. "Any reduction in the hodgepodge of reports and questionable data quality will be good for doctors and good for patients."

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