Ten Michigan physician groups have been paid more than $1 million in the first installment of what could amount to as much as $12 million in incentives distributed this year under a recently launched pay-for-performance program by Blue Cross and Blue Shield of Michigan.
"It's a way to get paid to do the kind of chronic illness program design we need to do anyway," said Thomas Carli, M.D., medical director of the medical management center and disease management programs at the University of Michigan Health System. The 1,200-physician University of Michigan Health System Faculty Group Practice is one of the 10 groups participating in the incentive plan launched in January.
"We think this is giving us a preview of coming attractions because Medicare is going to do it, too, as professional cost-of-living increases are going to be tied to these pay-for-performance plans," Carli said. "These programs are going to have to be in place and do these things to get that professional bump each year."
Thomas Simmer, M.D., senior vice president and chief medical officer of the Michigan Blues, announced Monday that the payments made to the groups are incentives for them to meet improvement guidelines and goals. Three more quarterly payments are planned this year, Simmer said.
Bonus payments were made based on performance by the groups in adopting electronic medical records systems, referring certain patients to care-management programs, identifying patients with a high risk of complications and applying evidence-based care programs to their care, and increasing use of generic drugs.
The program targets four chronic conditions: congestive heart failure, coronary heart disease, asthma and diabetes. Payments under the program were drawn against money "normally paid to physicians," not projected savings, according to the company.
Funds for the year will be allocated at one-half of 1% of claims volume, which should generate $10 million to $12 million in incentive payments for the groups this year, Simmer said. The Blues, the dominant payer in Michigan, cover more than $2 billion in physician claims payments each year.
"In some ways it is a zero sum and in some ways it is a win-win," Simmer said. "The manner in which we were paying under fee-for-service, there was no business case. The old method of giving physicians a fee increase did not enable us to focus on increases in efficiency and quality of care."
Simmer said 23 groups applied to participate in the program. The 10 that were chosen, which have about 2,900 physicians in total, had the ability to produce data for all of their patients -- either through claims or an electronic medical record -- regardless of whether the patients were covered by a Blues plan.
"That was one of the major suggestions we received from physicians," he said. "In order to achieve the goals of increased quality and efficiency, they needed to increase the quality of care for all patients, regardless of the payer."
Some of the participating groups are using the incentive payments to offset the cost of buying an EMR. Carli said the University of Michigan has had a partial, homegrown electronic record system called CareWeb for at least 10 years.
"It's a Web browser that allows us to pull information from lots of systems," he said. But the system will need a fair amount of improvements to its data analysis capabilities, such as being able to identify each physician's diabetic patients irrespective of payer and building in ways to provide feedback to physicians on their performance. Carli said his group will use some of the incentive money on the technology upgrades and some to train frontline nurses in care management.
The Blues anticipate the improvement in quality of patient care will produce cost savings, primarily from increased use of generic drugs. Those savings will be measured after the program has been in place for a full year.
Carli said the bonus payments for his group in the first year should be enough to offset its start-up costs, but he says, "The question is, how do we support this in an ongoing way? If those things aren't going to get reimbursed directly, how sustainable are they?"
Carli said he is optimistic that payers will address these ongoing, operational costs. Simmer said he thinks so, too.
"They (physicians) cannot make those resource-allocation decisions in the complete absence of a business case," Simmer said. "I'm hoping over time we can advance the program fast enough to take advantage of all the opportunities the program is creating. I'm convinced the program is sustainable."