Extra pay for quality care not easy money

One program finds the devil is in the details when it comes to starting a performance-based bonus program for physicians.

By Mike Norbut, amednews staff. July 21, 2003.

For six months, physicians have been working to satisfy requirements outlined in the nation's most ambitious attempt to offer bonuses for quality care. But they've done so without really knowing what they'll be paid for their efforts.

Doctors involved with the Integrated Health Assn.'s "Pay for Performance" plan in California got tired of being in the dark. So the California Assn. of Physician Groups organized a meeting July 8 to pressure some of the state's largest health plans to disclose their payment formulas. Referring to health plans, Don Crane, the group's president and CEO, said: "If you don't schedule a final exam, they won't study."

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The meeting apparently had the desired effect, as only one insurer declined the invitation, and other plans like Aetna revealed payment formulas.

But the slowly emerging details of the plan, which will rate and award bonuses to the state's largest medical groups based on clinical measures, patient satisfaction and use of technology, underscores the practical difficulties of putting such a far-reaching initiative into practice.

Problems with organizing the participants and the hesitation of some HMOs to announce their payment plans have made the initiative, one of a nascent movement of quality-bonus programs across the country, more difficult to implement than expected.

"There's a lot of anxiety at the medical group level," said Beau Carter, IHA's executive director. "They don't know all the specifics about the money, and it's making them nervous. Some are just angry. They think it will be a waste of time."

IHA will use data collected by the program to publish a scorecard, starting next year.

While three HMOs -- Blue Cross of California, Blue Shield of California, and PacifiCare Health Systems -- announced their pay structures last fall, Aetna U.S. Healthcare and Health Net announced theirs this month. The sixth, CIGNA Healthcare of California, did not attend the CAPG meeting and has yet to make its intentions public.

The insurers agreed to a common set of measurements as part of the initiative, but because of antitrust laws, the plans weren't allowed to collaborate on a single payment system. It's no wonder, then, that the payment plans differ, both in terms of the amount HMOs are planning to hand out and the way groups will receive their money:

Aetna will pay a bonus to groups that fall in the top 25% in any individual measurement category, with payouts being proportionate to each group's membership pool, said Jerry Bishop, MD, Aetna's medical director of west region medical services. A group that aces every category could receive a bonus of as much as 3.5% of the annual capitation rate, he said.
Blue Cross plans to reallocate existing funds earmarked for bonus payments under its current quality initiative, and it will award up to 10% of a group's annual capitated payment.
Blue Shield said last fall it would award groups a maximum of about $2 per member per month, with groups in lower percentiles getting less.
Health Net plans to pay its top performing groups a 5% bonus based on their capitated rates, which could equate to about $2.25 per member per month, spokesman Brad Kieffer said. Groups with their own internal incentive plans for individual physicians could earn an extra 10% of the bonus total, he said. Groups that don't meet the highest standards can still earn bonuses, but Health Net is still determining what the thresholds and payouts will be, Kieffer said.
PacifiCare, which announced the award of $14 million in bonus payments to 124 medical groups as part of its own program this year, said last fall it would pay monthly add-ons to a group's capitation rate as part of the IHA plan, with groups eligible to earn up to $2 per member per month.

When organizers announced the initiative, which could affect as many as 40,000 physicians, they estimated that bonus totals between the six health plans could reach $150 million. Insurers insist they are adding new money to the project and are not reducing payments elsewhere to make up the bonus pool, but some physicians have remained skeptical. Carter said he has suggested that each insurer consider a 5% bonus as a reasonable starting point for their payments.

The individual payment plans have created confusion for some medical groups, but organizers hope they have limited the hassles groups could face in reporting data, Carter said. IHA has called for a third party to audit each medical group's data, and there have not been significant issues in collecting the information, organizers said. IHA will use the data to publish a scorecard starting next year.

Bonus pay plans have brought contracts into question, though, as some insurers and groups have clashed over how to work the bonus initiative into existing deals, Carter said.

"There are conflicts between the individual contracts and the IHA plan," said Carter, who was a speaker last month at a Chicago seminar to share his experiences on quality bonus initiatives. "Once a contract is signed, no one wants to touch it."

Antitrust laws prevent HMOs from working together on a single payment system.

Contract negotiations haven't all been contentious, though. Donald C. Balfour, III, MD, president and medical director of Sharp Rees-Stealy Medical Group, a 300-physician multispecialty group based in San Diego, said some plans are adopting IHA "Pay for Performance" measures without changing their contracts, and others are simply sending amendments for review.

"I'm supportive of the plan," he said. "I'm hoping this will work. All I want the plans to do is participate."

Other supporters said that even though the IHA plan has evolved slowly, for it to have reached this point in its development without falling apart is encouraging.

"Any coalition effort is sometimes fraught with many unforeseen challenges," said Sam Ho, MD, senior vice president and chief medical officer of PacifiCare. "I think there's reason for optimism."