For all the talk about improving quality, only a minority of healthcare leaders are attempting the difficult task of aligning compensation with quality measures, according to industry watchers and physician executives. Jeff Stoddard, M.D., a senior physician researcher at the Center for Studying Health System Change (HSC) in Washington, D.C., says quality incentives as a part of physician compensation schemes remain fairly uncommon.
"Quality gets wrapped up in cost containment," says Stoddard, who estimates only 20% of incentives were quality-oriented in 2001.
Chuck Kilo, M.D., is CEO of Greenfield Health System, a four-physician internal medicine practice in Portland, Ore., and an Institute for Healthcare Improvement fellow. Kilo says systems that help achieve the best outcomes, not monetary incentives, should motivate physicians.
"Those who provide better quality will thrive anyway," Kilo says.
Even though one of the pronouncements of "Crossing the Quality Chasm," the second of the Institute of Medicine's landmark reports, is to align physician incentives with quality improvement, many insurers paying bonuses are focusing on productivity.
Adjusting incentives to reflect quality
Although quality indicators make sense in theory, they are not as easy to measure or define as those built around productivity. And when managed care plans provide financial incentives to encourage cost-effective care, it often translates into withholding necessary services.
After years of rewarding physicians based primarily on utilization, Aetna, based in Hartford, Conn., has taken quality into account in developing a new payment scheme. The company developed its quality enhancement model to "eliminate any perception that measures prevent access to care," says Donald Liss, M.D., senior medical director, Mid-Atlantic Region, for Aetna.
Each Aetna plan chooses from a menu of quality measures--from membership satisfaction to achieving American Diabetes Association guidelines for preventive care--and ties an enhancement to it. Physicians are assessed against their peers as well as relative to national guidelines and other quality standards. Some providers may earn as much as 25% of base pay. Liss is optimistic that Aetna has created measures that will lead to quality improvement.
"We have to make sure our payment model helps them do the right thing," he says. He warns, however, that measures must be reasonable, accurately assessed and aligned with the unit of service rendered--major concerns of some physicians.
Like Liss, R. Adams Dudley, M.D., assistant professor of medicine and health policy at the University of California at San Francisco, is concerned that incentives do not always reflect the most important clinical benefits--such as performing foot exams for diabetes patients rather than lowering their blood pressure. He also stresses the necessity of mechanisms to adjust for risk differences among enrollees. Without them, physicians would be given an incentive to stay clear of sicker patients.
Dudley says the ideal environment for quality incentives would embrace a free flow of information between all interested parties, a desire to improve at the practice group level and an open negotiation process about measures between payers, providers and employers.
"The main objective of these performance incentives is to bring about change," he says.
California breaks through
One of the largest collaborations behind quality incentives for physicians is Pay for Performance, initiated by the Integrated Healthcare Association (IHA) in Walnut Creek, Calif. Pay for Performance is the joint effort of six large California health insurers that serve more than 8 million members and contract with 35,000 physicians.
In a process expected to be in place by 2003, Pay for Performance will utilize a common scorecard to measure and reward physician group performance. Each plan will decide on the bonus payment, which medical groups may reinvest or use to reward individual physicians.
Although details are still being worked out and the plan will not be complete until September, proposals include bonus pay based on three preventive measures, three chronic care measures, patient satisfaction and a measure tied to the use of information technology.
Clinical measures will receive at least 50% of the weighting. Each of the plans also may add measures for rewarding physicians.
"We want measures to be challenging but not impossible to achieve," says Beau Carter, IHA executive director.
"Initially, the program will focus as much on each medical group's ability to capture and report data as on achieving quality goals," he says. "For example, a group may reach a target for childhood immunizations but not have information systems to accurately report it. Plans and providers must build cooperative data systems, or there will be no improvement in care."
Along with ensuring that systems are in place to measure data and establishing cost-sharing arrangements among the program's constituents, Pay for Performance organizers also must contend with physician buy-in--no small feat.
"Despite lip service to quality, most incentives have been based on cost," says a skeptical David Druker, M.D., president and CEO of the Palo Alto (Calif.) Medical Foundation, a 500-physician practice that will be part of Pay for Performance. He says the program is a move in the right direction but questions how it will be administered and if providers and insurers can agree on relevant, objective quality measures.
Druker says he would like to see quality analysis go beyond the Health Plan Employer Data and Information Set (HEDIS).
One final caveat: "Incentives must come from 'new money,' not withholds from rates we have already negotiated with plans," he says.
But Robert Margolis, M.D., CEO of Healthcare Partners, a combined medical group and wrap-around network in Torrance, Calif., applauds the efforts of Blue Cross of California (a Pay for Performance member) and IHA for designing a mechanism to measure and standardize performance measures.
He says most doctors are unwilling to make the investment in collecting and analyzing data without an incentive. Blue Cross estimates that its physician groups stand to earn an average of $4.50 per member per month by achieving clinical and satisfaction measures.
Minneapolis-based HealthPartners in 1996 adopted its Outcomes Recognition Program. It recognizes and rewards participating primary clinics for improving clinical outcomes as its vehicle for achieving health promotion and disease management goals.
To qualify for participation, clinics must have been in the plan network for at least two years and treat at least 2,500 enrollees.
HealthPartners selected five clinical performance targets, including the percentage of members up to date on age- and gender-specific preventive health services (75%) and asking members at each visit if they use tobacco and, if so, advising them to quit (80%).
Clinical measures weigh in equally, comprising 70% of the total, with patient satisfaction picking up the additional 30%. The plan relies on guidelines developed by the Minneapolis-based Institute for Clinical Systems Improvement.
"We set 'stretch targets' to urge physicians to improve but at the same time make sure they are not out of reach," says Gail Amundson, M.D., associate medical director for quality and utilization improvement for HealthPartners.
The plan paid out $670,000 last year to 20 eligible medical groups.
Western Wisconsin Medical Associates, a 40-doctor primary care group in Ellsworth, says that for the first time the practice can document measurable quality and be recognized for it--thanks to the standards set by HealthPartners.
"The incentives have brought out our competative spirit to improve," says Christopher Tashjian, M.D., a partner in the medical group.
Mari Edlin is a freelance writer based in Mill Valley, Calif.