"Pay-for-quality" pilot project gets high marks

A physician group and insurer are promoting the pay-for-performance and disease management program as a model for Medicare.

By David Glendinning, AMNews staff. July 24/31, 2006.

Washington -- When managed care companies or the federal government start putting forward plans to base physician reimbursements on quality measures, doctors often worry they will end up being losers. But a community health plan and the physicians who participate in it think they might have found a way in which everyone can be a winner.

For the past year, the Nashville, Tenn.-based insurer HealthSpring has been running what it calls a "pay-for-quality incentive program" with the Sumner Medical Group, a 15-physician practice in Gallatin, Tenn. By coordinating care for the roughly 1,200 Sumner patients enrolled in HealthSpring's Medicare Advantage program, plan officials hoped to improve patient health outcomes while decreasing overall costs for this population.

To accomplish this, the insurer took a two-pronged approach that it says is unique. It teamed up with disease management firm Healthways in Nashville to provide the doctors with free nursing staff who helped keep track of patients between office visits, issued reminders about appointments and alerted physicians when patient conditions at home appeared to be worsening. At the same time, HealthSpring offered a 20% pay bonus to Sumner physicians who were able to hit certain quality targets.

After only a year, the results are remarkable, said representatives from the medical group, the health plan and the disease management firm. Not only did the Medicare Advantage patients' health outcomes significantly improve, but the physicians received full quality bonuses and the insurer saved money in the long run.