Even prior to the first bonus payments coming this fall from health plans within California's Integrated Healthcare Association, pay-for-performance programs have had a growing impact on the bank accounts of physicians associated with one of the Golden State's largest independent practice associations.
The 2,100-physician Hill Physicians Medical Group, based in San Ramon, Calif., reported paying out to member physicians $12 million in performance bonuses for 2003, based on 2002 performance, and nearly half of that, or $5.6 million, came from bonuses paid by three health plans.
Blue Cross of California, Blue Shield of California and Health Net are three IHA member plans who got an early jump on pay-for-performance plans, according to Steve McDermott, CEO of Hill Physicians. The IPA reported receiving $4.2 million in plan bonus payments from the two Blues plans in 2002 based on 2001 data. Hill payed out $9 million in total bonuses to physicians in 2002.
Historically, the bonus payments have gone to the IPA's primary-care physicians, but six of 28 specialties represented by the IPA voted last year to join the bonus program, and six more specialties are expected to join them this year, McDermott said.
Overall, Hill is reporting net income for 2003 of $5.6 million, up 3.5% from the year prior, on total revenues of $290 million, up 6% from 2002.
In addition to the two Blues plans and Health Net, the IHA, based in Walnut Creek, Calif., has among its original six participants Aetna, Cigna Healthcare of California and PacifiCare. The six this fall will be calculating their first bonus payments linked under the IHA initiative based on 2003 data. The checks should be cut to the physicians by August or September, McDermott said.
All six plans have agreed upon uniform criteria on which the bonus payments should be made. These include clinical quality (50%), patient satisfaction (40%) and adoption of information technology (10%).
Payment amounts will be determined by the individual plans.
The IHA set a May 28 deadline for participating physician groups to submit data on themselves to augment information collected by the plans. That data will be sent to the National Committee for Quality Assurance for analysis and sent back to the plans by Aug. 1, according to IHA Executive Director Tom Williams, who estimated clinical data has been collected on about 240 particpating physician organizations, with smaller numbers of groups providing metrics on patient satisfaction and IT.
A seventh health plan, 100,000-member Western Health Advantage of Sacramento, joined the IHA initiative last year. It will participate in performance measurements on 2004 data and will make bonus payments in 2005.
The 2004 criteria could change slightly for 2005 payments, based on approval of a draft proposal currently under review by IHA members. For example, the percentage of bonus payments based on making clinical-quality guidelines will drop to 40%, while the percentage for IT will rise to 20%. Several clinical measures also will be added.
One intriguing proposed change would be to begin gathering data on individual physicians, with an eye toward eventually linking it to performance bonuses, too.
Hill Physicians has been doing doc-by-doc analysis for years, said McDermott, who is an advocate, but he conceded the idea of rolling it out statewide was "slow simmering" among IHA participants.
"They want to see how it impacts other groups," he said. "We've already answered that question here; it works. We can demonstrate how this rewards program benefits patient care."