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Insurers Pay Doctors to Keep You Healthy ; All Three Area Health-Insurance Providers Have Adopted Pay-for- Performance Models

Posted on: Wednesday, 7 September 2005, 09:00 CDT

If your doctor cares more lately about whether you're taking your medicine or making your appointments, it's not just because he's worried about you. He's being paid to do so.

Health insurers locally and nationally are increasingly pushing programs in which doctors and hospitals get reimbursed more money for providing better quality service to patients. The goal is to encourage doctors to give patients the care they need now, to minimize health problems and costs later.

"Better quality ultimately costs less," said Dr. Michael Cropp, chief executive of Independent Health Association. "Do it right the first time, and you will end up with better results."

The insurers want medical providers to check up on patients, make sure they follow directions, monitor their conditions, and give them the right routine tests and care that is called for in each case. In exchange for meeting agreed-upon levels of care and criteria -- usually based on national standards -- the doctors will get extra payments, above what is called for in their insurance contracts.

"What do you want to pay for? You want to pay for the best outcomes," said Dr. John Gillespie, chief medical officer for HealthNow New York, parent of Blue Cross Blue Shield of Western New York. "We don't want to know that you're seeing them. We want to know they're doing well."

All three of the big local plans -- Blue Cross, Independent Health and Univera Healthcare -- have introduced such plans into their medical contracts with primary care physicians, hospitals and specialists. That's put Buffalo in the forefront of the trend, since very few communities have all of their dominant insurers participating.

"Buffalo is way ahead of the curve. We're one of the leaders in the nation in pay for performance, because we've been doing this for 10 years or so," said Dr. Don Robinson, president of the Independent Practice Association, the doctors group linked to Independent Health.

Of course, doctors and hospitals say they want to provide the best level of care, regardless of the bonuses. They say they already try to follow established standards of care, and worry that the public will view the payments as improper.

"If you consider it a bonus, someone would think we're being paid for what we should do," said Dr. Judy Smith, medical director at Roswell Park Cancer Institute, which gets incentives from Blue Cross and Univera, and is negotiating a deal with Independent Health.

But doctors concede that they're not perfect. "We welcome this level of scrutiny. We're willing to take a look at where we're not doing well and get better," said Dr. Margaret Paroski, chief medical officer at Kaleida Health, which last year based $7.5 million of its pay on incentives from Blue Cross and Independent Health. "Even if it gives you a few embarrassing moments, we're never going to improve if we don't hit that accountability."

The additional cash also can help to offset investments in technology, time and labor that are necessary to accurately monitor their patients.

And insurers insist the payments are a reward for doing better, not a bribe to do so. "We pay for higher quality. We'd like everyone to do better," said Dr. Jay I. Pomerantz, regional vice president and chief medical officer for Univera Healthcare.

The level of bonus varies depending on the contract and the degree of performance, and can be paid out once a year or in installments. Nationally, it can range from as little as 2 percent of total annual reimbursements for hospitals to as high as 20 percent for individual doctors. Or it can be a flat fee.

Independent Health pays up to 15 percent to physicians, or up to $7,500 for a doctor earning $50,000. Univera pays $1.50 per member per month to doctors.

But it can be higher. And it can also be a penalty for lesser providers, who might lose that much from their pay.

"It is money at risk, whether it's a bonus at risk or a penalty," Smith said. "These kind of initiatives are very important in trying to maintain the health of an institution."

Physicians embrace change

Take Robinson, a family practitioner in Hamburg. Right now, pay for performance bonuses account for about 5 percent of his practice's total compensation -- about $30,000 a year.

"That could easily double if I did a good job," he said. "I'm an average doctor and I do average work. There's considerable incentive for me to do better."

So he's purchased a $50,000 computer system to help him track routine tests for his patients. And he predicts the bonuses could triple in five years.

"That won't pay off right away, but with pay for performance increasing every year, it makes sense to invest in equipment that will guarantee better quality," he said.

And Dr. Mike Heimrl, a pediatrician with practices in Grand Island and Amherst, said the bonuses he gets are "significant enough that we're going to look at the measures and make sure we perform well."

In the health care field, the rise of so-called "pay for performance" -- a phrase typically used to refer to executive compensation -- is the latest effort to control skyrocketing costs, while addressing a perceived problem with medical errors.

It's also attracted the attention of the federal government, which is implementing a pay for performance component into Medicare in 2006, focused on cardiac care, pneumonia and hip or knee replacement surgery. That's expected to drive more such initiatives nationwide, as the private sector often follows the government's lead.

Medicare will pay a 2 percent bonus for the top 10 percent of performers among hospitals and 1 percent for the next 10 percent. But beginning in 2007, the bottom two tiers will similarly lose 1 percent to 2 percent. Other programs are also being developed for individual doctors and other providers.

"You've got the government behind it, which probably speaks volumes to the fact that it's not going away anytime soon," said E. Preston Gee, senior managing director at Phase 2 Consulting in Austin, Texas.

Doctors traditionally have been somewhat resistant to change, and suspicious of anything handed down from insurance companies. But both sides generally say the latest initiatives -- if done properly and collaboratively -- are good for everyone.

"There really is a good community collaboration among the providers and the payers to do what's best for Western New York," said Pamela Germain, Roswell Park's vice president for managed care and outreach. "Nobody's wincing about this."

"We have always tried to move the insurance companies in this direction because it's a much better place for us all to be in," said Dr. Irene Snow, medical director for Buffalo Medical Group.

Cooperative effort

Unlike some efforts in the past, the new programs feature much more cooperation between insurers and doctors. In some cases, providers like Kaleida have even come to insurers with proposals for improving performance in exchange for incentives. They also work together to determine which criteria has enough data that it can be used to measure performance.

For primary care, such criteria often include managing chronic conditions like diabetes, asthma, high cholesterol, and congestive heart failure. It also could include ensuring that patients get all appropriate shots and immunizations, eye exams, mammograms or colorectal screenings, and blood tests.

Hospitals might look at heart attacks, pneumonia and similar conditions, as well as medication management, length of stay, and risk of infection. And both doctors and hospitals could be rewarded for using computerized medical records.

For a specialty hospital like Roswell, doctors looks at accuracy of pathology, infection rates, appropriate use of blood and platelets, and appropriate use of surgery, bone marrow transplants, chemotherapy or radiation. Some are for the entire hospital, while others are for specific cancers.

"It's very reinforcing to be able to say to physicians here that outcomes count. If we hit the targets, we're going to get more money," Germain said.

Some insurers also reward doctors for writing a higher percentage of generic prescriptions, encouraging "pill-splitting" where possible, and operating more efficiently.

Some doctors caution against too much emphasis on business practices as opposed to medical issues, but both sides say it's been generally successful.

For example, Kaleida brought its mortality rate, which had been above statewide norms, below the state average because of incentives. It invested $1 million in a system to check for drug interactions. And its new remote intensive care monitoring system was developed largely to improve quality.

"We know we have room for improvement," said Connie Krasinski, Kaleida senior vice president and chief learning officer. "This was a way for us to speak with our actions as well as our words."

And Independent Health has seen double-digit gains for doctors in more than 20 measures of asthma and diabetes care.

"Every year, more physicians achieve the level of performance that garners an incentive, which shows it's working," said Cheryl A. Howe, HealthNow executive vice president of health services and marketing management.

Even talk of publicly disclosing some results doesn't necessarily deter providers, as long as the data is fair and accurate.

"Nobody minds taking the test," Paroski said. "They just want to make sure it's graded properly."

e-mail: jepstein@buffnews.com

Source: Buffalo News

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