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Most HMOs Pay Physicians Geared to Performance


BOSTON, Nov. 6 -- More than half of HMOs that responded to a national survey said they routinely incorporated pay for performance into 2005 physician contracts.

BOSTON, Nov. 6 -- More than half of HMOs that responded to a national survey said they routinely incorporated pay for performance into 2005 physician contracts.

Pay for performance was more common in the northeast and west, where it was used by 75% of plans, although it remains relatively uncommon in the South, where only 20% of HMOs used pay for performance, according to Meredith B. Rosenthal, Ph.D., of Harvard Medical School, and colleagues.

The Midwest was in between with 56.4% of plans including pay for performance in contracts last year, Dr. Rosenthal and colleagues reported Nov. 2 issue of the New England Journal of Medicine.

But the private sector is well ahead of Medicare, which is cautiously moving forward with pilot plans aimed at implementing pay for performance for Medicare Part B.

Holding Medicare back may be that some HMOs using pay for performance offer bonuses of 5% or more of total payments as incentives to top-rated physicians, "presumably reflecting their belief that this level of payment to providers is needed to achieve improvement," the authors wrote.

That financial carrot may be too rich for Medicare, because the Centers for Medicare and Medicaid Services (CMS) is already under the gun to hold down costs, they noted.

The HMOs that used pay for performance represented more than 80% of patients enrolled in 252 HMOs in located in 41 metropolitan areas.

Among the findings:

  • The average enrollment in HMOs sampled was 323,553.
  • Among the 252 plans that responded to the survey, 53.1% used some variety of pay for performance in physician contracts (P<0.001).
  • Most plans that used pay for performance (61.3%) required members to select a primary-care physician as a gatekeeper (P=0.002).
  • Most of the HMOs that used pay for performance were not-for-profit, 69.7% versus 46.3% (P<0.001).
  • 88.4% of the payments were tied to pay-for-performance goals (P<0.001) in HMOs in which more than half of the payments to physicians were geared to a capitation plan,
  • One hundred and thirteen plans had physician-oriented pay-for-performance plans and of these only 13.3% focused solely on the individual physician as a unit of payment.
  • Performance targets almost always included a mix of quality of clinical care, use of information technology, and patient satisfaction measures.

In a perspective in the same issue of the New England Journal of Medicine, Elliott S. Fisher, M.D., M.P.H., of Dartmouth Medical Center in Hanover, N.H., noted that a recent report by the Institute of Medicine raised a number of concerns about implementing pay for performance -- including a basic concern about the ability to adequately monitor and evaluate the plan.

"The shift from autonomy to accountability and from fee-for-service practice to new methods of payment appears inevitable," he noted.

"Unfortunately, much of the current work in performance measurement and pay for performances seem to ignore one or more of the commonsense principles outlined by the IOM committee," he wrote.

For example, he continued, the technical quality measures proposed by CMS "still reflect a tiny segment of clinical practice," and the efficiency measures proposed appear to promote "fragmented care by multiple providers," which he said was a prescription for confusion.

Dr. Fisher concluded that as Medicare tackles yet another Part B reform scheme -- this time using the rallying cry of "evidence-based" performance -- it would "be wise to apply a similar standard to the implementation of our health policy reforms."

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