California health insurers boost doctor bonus payments by $10M to $65M

by Chris Rauber San Francisco Business Times

Pay-for-performance bonus payments from health plans to California medical groups totaled $65 million for 2007, $10 million more than the bonuses distributed in 2006, according to the Integrated Healthcare Association, which designed California’s Pay for Performance program for physicians.

The 2007 payments were distributed to medical groups during last year’s third and fourth quarters, the IHA said Wednesday, reflecting the 2006 performance of medical groups and individual practice associations, or IPAs, that serve HMO members.

The quality bonuses typically average about 2 percent of annual reimbursements to the participating groups — an amount critics say isn’t significant enough to give medical groups a financial incentive to improve quality, which often requires large investments in information technology or changing practice patterns and internal cultures.

However, payments to individual groups vary from nothing to as much as 5 percent of overall reimbursement, based upon their individual performance. Bonuses reflect how a group performs versus its peers, IHA said, but emphasis is also given to groups that make notable improvements over prior years, and the IHA is encouraging HMOs to put aside 20 percent of their 2008 performance bonuses for groups that make that sort of performance leap.

Aetna, Blue Cross of California, CIGNA Health Net, PacifiCare and Western Health Advantage participated in the so-called P4P payments last year, IHA said, “with each health plan determining its own budget and methodology for calculating bonus payments to the physician groups.”

According to the Oakland-based nonprofit, headed by Executive Director Tom Williams, 235 medical groups representing 40,000 physicians and caring for 12 million HMO enrollees statewide participate in the program. That makes it the largest such physician-incentive initiative in the nation, according to IHA, which is supported by health plans, physician groups and hospitals, as well as other segments of the health-care industry.

Over the voluntary program’s first four years, HMOs awarded $210 million in medical-group bonuses to organizations that meet P4P quality standards.

In addition to the bonus payouts, IHA publicly reports the performance of participating groups each year, which is seen as another incentive for groups to pay attention to quality.

“Public reporting is an important motivator for California physician groups who take great pride in both the care they deliver and the perceptions of patients about their care experience,” Wells Shoemaker, M.D., medical director of the California Association of Physician Groups, said in the Feb. 27 statement.

Last July, P4P results for 2006 showed that participating groups improved on clinical measures by 2.6 percent over the prior year, according to IHA, although “patient experience of care” results improved on average by a minuscule 0.4 percent. Jeff Kamil, M.D., Blue Cross of California’s vice president and chief medical officer, admitted the initiative hasn’t yet resulted in “major breakthroughs,” but said steady, incremental progress has been made, “and we continue to support efforts to improve the quality of care.”

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