Does quality pay? It does in this competition

‘Best’ groups earn the highest HMO bonuses

You’ve heard it many times before: Managed care organizations want to contract with medical groups that can prove their quality. Yet when you negotiate contracts, most of the talk centers on cost and utilization. So where’s the beef?

Health Net of Woodland Hills, CA, wanted to dangle at least a few carrots based solely on performance measures, customer service, and patient satisfaction. The best medical groups win a per-member bonus and a marketing boost. Utilization and cost are not factors.

"We’re comparing medical groups to other medical groups," says Ron Stettler, MBA, manager of medical information systems in the quality initiatives division of Health Net. "We’re not saying this is the bar, and if you get over the bar, you receive this bonus. [We’re saying] if you do well in relation to other groups, here’s the bonus."

The Quality of Care Improvement Program is built on a complex formula that provides points to groups scoring in the 60th percentile or above on a variety of measures. For example, it includes Health Plan Employer Data and Information Set (HEDIS 3.0) measures such as mammogram or immunization rates and medical group transfer and complaint rates.

Health Net also sends out 450,000 patient satisfaction surveys and receives about 110,000 responses, which are used to gauge patient-based measures of service, access, satisfaction, and physician competency.

"If you score even one point in any indicator, you get some money," says Stettler. "There are some groups that don’t meet any of the indicator values. Last year, 99 groups out of 133 got some kind of award."

This year, for the first time, Health Net included an incentive for medical groups to collect and send data on patients. If they submit data on at least three encounters per member per year, they will receive points toward a bonus, says Stettler. Because most medical groups in California are paid under capitation, they don’t need to submit claims for reimbursement. Instead, they report the CPT and ICD-9 codes as "encounter data."

"It’s definitely brought quality into focus," says Stettler. "People care about it now. We’re getting closer to actually being able to measure quality.

"In the past, because the data were so bad, you couldn’t measure it," he says. "Once it’s been measured, you’ll be able to affect it."

The bonus program is most attractive for large groups, which can earn as much as $250,000 to $300,000. The competition also inspires some of the lower performing medical groups to do a better job of data collection, says Stettler. Some may seem like poor performers simply because they don’t collect data on Pap smears and other preventive care.

In the tight California market, physicians have responded to the quality bonuses. "Doctors in California are seeing their incomes squeezed so tight, they’re willing to consider all kinds of initiatives that would bring them more," remarks Alfredo Czerwinski, MD, senior vice president for clinical resources and chief medical officer of Sutter Health in Sacramento, CA.

In this case, Health Net does not include a punitive side to the quality incentive program. Physicians will not lose money if they don’t perform as well as their peers.

"The approach we’re taking is one of cooperation with the provider community," says Antonio Legorreta, MD, MPH. Legorreta is vice president of quality initiatives for Foundation Health Systems, the Woodland Hills, CA-based parent company of Health Net. "I don’t think we’re going to be able to influence change without having them — the providers — as partners with us.

"You don’t create partnerships by punishing individuals," he says. "We have been able to demonstrate by working under this very strong collaborative framework we’re in a better position to affect change."