HMOs to reward physician groups

March 1, 2002

Pharmaceutical Representative

The Walnut Creek, CA-based Integrated Healthcare Association has unveiled the first Pay for Performance initiative that will utilize a common scorecard to measure the performance of its physician groups and pay incentives based on that performance.

The Walnut Creek, CA-based Integrated Healthcare Association, a statewide health policy and managed care association, has unveiled the first Pay for Performance initiative that will utilize a common scorecard to measure the performance of its physician groups and pay incentives based on that performance. Six California HMOs – Aetna, Blue Cross of California, Blue Shield of California, CIGNA Healthcare of California Inc., Health Net and PacifiCare – are participating in the initiative, which will be fully in place by January 2003.

"These health plans are showing real leadership," said Beau Carter, executive director of the IHA. "In an otherwise highly competitive marketplace, where health plans naturally want to differentiate themselves, these plans have seen this as the right thing to do: measure and reward quality of service and quality of care. Pay for Performance will improve the quality of healthcare for millions of Californians, focus national attention on a new paradigm of promoting accountability for results and rewarding excellence, and re-establish the partnership between health plans and physician groups in managing care."

A common scorecard

The Pay for Performance system will utilize a common scorecard for the physician groups, representing a balance of prevention, chronic care management and patient satisfaction measures. An independent entity will validate the data and publish the results. The individual health plans will then provide incentive payments to the physician groups based on this performance, with the amount and nature of the payment varying by plan. All physician groups will be given the discretion to use the bonus payments for upgrades in office technology, for physician bonuses or any other way they see fit.

"We have finally created a business case for quality at the physician group level," said Steve McDermott, president and chief executive officer of Hill Physicians Medical Group and chair of the IHA board of directors. "We now have an opportunity for significant financial rewards if we do a good job. Our patients will be healthier, and our physicians will be happier." PR

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