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CCH® BENEFITS — 03/23/09

No Substantial Gains In Quality Yet In Pay-For-Performance Program

from Spencer’s Benefits Reports: Physician organizations involved in the California Integrated Healthcare Association’s (IHA) pay-for-performance program have begun to embrace an array of changes important to advancing quality, according to a RAND Corporation study issued on March 11. However, after three years of investment, these changes had not translated into breakthrough quality improvements.

Measures adopted by the medical groups include speeding up adoption of information technology such as electronic medical records, more closely tracking the improvement of physician performance and sharpening institutional focus on quality, according to the study’s findings. The project was supported by a grant from the California HealthCare Foundation.

“Physician groups are responding to pay-for-performance programs by making practice changes and altering how they compensate physicians to reward quality, but health plans and purchasers say that those investments are not yet translating into substantial gains in quality,” said Cheryl Damberg, the study’s lead author and a senior policy researcher at RAND. “The true benefits of these programs may take more time to be realized and it is likely that investments in other quality efforts will be needed in addition to performance-based pay.”

The RAND health care study found that medical groups are providing some payments to individual physicians based on quality measures, and physicians in the program are receiving more feedback about whether they are attaining quality goals.

Details Of Program

RAND researchers are evaluating a statewide pay-for-performance program launched by the IHA in 2003. The initiative includes seven major California health plans and 225 physician groups. The groups employ 35,000 physicians who care for 6.2 million people enrolled in commercial HMOs and point-of-service plans.

Under the program, physician groups receive financial bonuses if they meet certain performance guidelines such as increasing the number of patients with diabetes who receive recommended blood tests. Other performance measures include improving patient experience with getting care and adopting health information technology capabilities. Between 2003 and 2007, the participating health plans paid $203 million in incentives to participating physician groups.

The RAND study reported findings gathered from surveys of 35 medical groups, the seven health plans, and representatives from two employers that are involved in the pay-for-performance experiment.

Most of the medical groups surveyed suggested that the program’s financial incentives—generally about $1,500 to $2,000 annually per physician—were too small to stimulate significant change among most doctors. They suggested that the incentives needed to be two to five times higher in order to achieve quality improvements.

Health care plans reported that increasing the incentives was a low priority because of the relatively small quality improvements attained thus far and some questions about whether other types of investments might produce greater quality gains, according to the study.

Although there is some concern that pay-for-performance programs might cause physicians to drop patients who decline to follow recommendations, few reports of such events have been received. More than two-thirds of the medical groups reported that the pay-for-performance program has resulted in more positives than negatives.

Most physician organizations said that they collected more money in bonus payments than they had spent to comply with the program, although six said that it was barely enough to cover their costs. Twenty of the medical groups surveyed said that the program had affected the behavior of their individual physicians, prompting them to embrace quality efforts such as performing more intensive outreach to patients.

For more information, visit http://www.rand.org/.

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