HMO Industry's "Pay For Performance" Is A Mirage:
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Jan 15, 2002

HMO Industry's "Pay For Performance" Is A Mirage:

Small Quality Bonus Does Not Negate 100% Pay To Drs For Doing Less For Patients
The Foundation for Taxpayer and Consumer Rights (FTCR) stated that the HMO industry's announcement today that it would pay doctors a bonus based on health quality is illusory. FTCR noted the the main mechanism by which HMOs will continue to pay physicians provides them more money for providing less medical care for patients. This "capitation" model -- where doctors receive a lump sum, per patient amount for all care regardless of how well or sick the patient is -- is a 100% financial incentive for doctors to make more money by doing less for patients. The so called "pay for performance" plan will not adjust this capitation payment mechanism, which is the only meaningful reform.

"A small bonus paid by HMOs to physicians for quality indicators will not negate the fact that 100% of physician pay outside of the bonus is still based on the premise of paying doctors more money for providing less medical services to patients," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights. "If HMOs really wanted to improve health quality, they would pay doctors more to treat sick patients than they do to treat well patients. This method called risk adjusted capitation is a reform HMOs continue to resist because the companies make more money by foisting financial conflicts of interest on doctors that erect obstacles to care. Patients will not benefit until HMO payments to physicians are adjusted upward for the sickness of the patient."

The Foundation for Taxpayer and Consumer Rights called upon the HMO industry to accept risk adjusted capitation so that doctors have no financial incentive to shun the sickest patients.

"This mirage should not deter political support for a patients bill of rights in Washington, D.C.," noted Court.

The Foundation for Taxpayer and Consumer Rights is a nonprofit nonpartisan consumer watchdog group --

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