California HMO: Doctor bonuses based on patient satisfaction

The Blues plan is no longer basing bonuses on cutting costs. Others may be following its lead.

By Cheryl Jackson, amednews staff. July 30, 2001.

Managed Care: What's Next?"
With the managed care system drawing complaints from all quarters, doctors, patients, payers and even insurers themselves found themselves looking for alternatives to a concept that hadn't met its promise of improving care while reducing costs. This 2000-02 occasional series highlighted what physicians and others were doing to come up with a way to improve the system -- or replace it with something else.

Blue Cross of California's very public pronouncement in July that it would base physician bonuses exclusively on patient satisfaction instead of cost control may not be an isolated incident. With corporate pressure on managed care plans to justify their ever-increasing rates, some are expecting more HMOs to make a similar move.

Under Blue Cross' plan, doctors could receive up to a 10% bonus on their quarterly payments if they score well on patient satisfaction surveys and on how well they provide preventive services. Previously, such a bonus had been tied to how well physician groups controlled costs. Contracts will be amended so that the bonuses are doled out in 2003.

Performance pays

Health plans across the country already tie compensation to patient satisfaction, although not exclusively basing physician bonuses on it. Blue Cross, a division of Thousand Oaks, Calif.-based WellPoint Health Networks Inc., introduced a satisfaction-based bonus system in 1994 and constructed its new system last year.

"The original decision to expand it was marketplace driven," said Michael Belman, MD, WellPoint's medical director. "Employers want more value for the premium. And from the physician side, physicians who receive incentives for quality care are more satisfied physicians."

Employers appreciate the idea of health plans rewarding physicians for quality and patient satisfaction, said Peter Lee, president of the San Francisco-based Pacific Business Group on Health.

"With the significant increase in health care costs, purchasers are increasingly turning their attention to the quality of care being provided because they question the increased payments they're making," he said. "There's been an increased scrutiny relative to quality as premiums have been rising in recent years."

In theory, a health plan's move toward compensation not based on cost savings would stop giving incentives to doctors to skimp on care.

But doctors are not sure that such a change will truly be beneficial to them.

"Everyone knows you cannot trust health plans to come up with an answer for patients and doctors. We are suspicious that this is more public relations than real change," said Peter Warren, spokesman for the California Medical Assn., which has a lawsuit pending against Blue Cross regarding alleged downcoding of claims. "I don't think anybody believes that a for-profit health plan's motivation is anything but to make money."

Even some health plans are skeptical of satisfaction-based pay, for different reasons.

"Smoke and mirrors," said Robert J. Forster, MD, vice president of care and network for Florida Blue Cross and Blue Shield. "There's no relationship between patient satisfaction and the quality of health care. The relationship of the doctor to the patient and their access, all will impact satisfaction scores, but not necessarily the technical delivery of health care," he said.

Small steps

Blue Cross of California's announcement comes as HMO reform -- the Patients' Bill of Rights -- moves through Congress. Plans deny that has had an effect on pushing quality over cost in their compensation, although the AMA-supported bill is one of many pressures on plans to prove they're more about taking care of patients than just saving money.

Health plan premiums have been going up 10% to 15% in the last few years, irking employers who had signed up for HMOs because they were low cost. Meanwhile, eight states have passed bills allowing patients to sue their HMOs for denying what they believed was a needed procedure.

Tom Carroll, an analyst at Baltimore-based financial services company Legg Mason Inc., said the Blue Cross move is a good one from a public relations standpoint.

"This is basically a movement away from what is perceived by the public as being something that is more onerous I think than it actually is. You have to have some kind of incentive to manage cost in health care," he said, adding that doctors tend to want to provide unlimited care.

Still, more plans are increasingly using patient satisfaction or quality measures as a greater baseline for compensation:

Blue Shield of California, which is based in San Francisco, began a quality incentive program in January. Under the plan, medical groups can earn up to 5% more based on quality measures. "It's a good thing. It's not a unique thing. I'm still struggling," said Jeff Rideout, MD, Blue Shield's chief medical officer.
In June, Harvard Pilgrim Health Care in Boston signed a four-year contract with Partners HealthCare Systems, under which Partners' 1,000 primary care physicians and 3,000 specialists would get rewards for preventive measures including ensuring that diabetes patients get regular eye and kidney checkups. In the past, the plan set aside part of its yearly payment to Partners until the end of the year, then paid physicians if cost-cutting goals were met. Now, those amounts will be paid to doctors if the quality measures are fulfilled, along with other financial standards.
Indianapolis-based Anthem Inc. is moving toward a system that would pay hospitals based on meeting clinical standards and is basing 5% to 10% of bonuses to 500 New Hampshire doctors on preventive health standards.
WellPoint is considering expanding its new bonus payment system to other WellPoint companies, such as Blue Cross Blue Shield of Georgia and UniCare Health and Life Insurance Co. Under the new system, plans will survey patients to get their satisfaction levels, as well as talk to patients who decide to switch doctors.

ADDITIONAL INFORMATION:

Performance pays

Blue Cross of California will reward physician groups up to 10% based on quality care measures and patient satisfaction. Parent WellPoint Health Networks Inc. says it may expand the system to other plans.
Harvard Pilgrim Health Care in Boston will pay Partners HealthCare Systems Inc. doctors based on quality measures, rather than cost cutting.
Indianapolis-based Anthem is basing 5% to 10% of bonuses to 500 New Hampshire doctors on preventive health standards.
Blue Shield of California in January initiated a quality incentive program. Medical groups can earn up to 5% more based on quality measures.
PacifiCare Health Systems Inc. has a quality reward system in place since 1998, based on about three dozen clinical measures. High-performing groups are assigned more members, which, the insurer says, results in more revenue.