While the extra money was welcome, Robinson was more impressed with how the health plan supplied him with a list of patients who were due to take colorectal or breast cancer screening exams, two of the five targeted areas in the health plan's Quality Management Incentive Awards program.

"People are saved by early detection of their cancer," Robinson says. "The incentive program gives me the tools and the support to practice more preventive care. It is very rewarding when I get biopsy results back and I can tell a patient he or she doesn't have cancer or that it is curable."

Such quality incentives are part of Independent Health's three-year-old physician incentive program. Under the program, Robinson's assistant calls dozens of patients who have been identified by the health plan as being at risk for colon or breast cancer. A few patients refuse to take the tests, but most are happy the doctor is showing interest in their health, he says. The plan also rewards physicians for improving asthma management and childhood immunization rates. This type of proactive health care proves to be a win-win for both doctors and patients.

Incentive Guidelines

In 1994, the American Medical Association (AMA) developed an ethics policy on managed care. Under the policy, financial incentives are permissible if they promote the cost-effective delivery of health care and do not encourage physicians to withhold medically necessary care. "Health plans or other groups should develop financial incentives based on quality of care," according to the AMA's "Ethical Issues in Managed Care."

Ronald Bangasser, MD, president-elect of the California Medical Association, notes that health plans' quality-based incentive plans are consistent with the AMA's ethical guidelines. "The trend of health plans paying for quality is a good one," he says. "Physicians strive to practice quality medicine and anything health plans can do to help them aligns interests."

Further, instead of varying care by where the patient lives, quality incentive programs assist physicians to deliver care based on current and sound scientific evidence, as stressed in the National Academy of Sciences' recent landmark report, "Crossing the Quality Chasm."

Incentive Plans Mature

Over the last several years a revolution has occurred in health plan physician incentive programs. Many have moved away from bonuses that rewarded doctors based on appropriate utilization, and are embracing quality-based incentive plans that emphasize preventive care and disease management.

Despite growing physician support, payers and providers disagree about whether health plans are doing enough to reward physicians for making quality improvements, according to a PricewaterhouseCoopers survey of 650 health care leaders.

"Some doctors are very suspicious that this incentive money would have been paid to us anyway in the form of payment updates," says Robinson, who is on Independent Health's physician advisory council. "They ask, 'Why can't we just be paid more money? We do these things anyway for our patients.' The answer is that we can't afford to do sloppy work in America anymore. Some physicians need to be encouraged to practice quality medicine. This program gives us the tools we need."

In PricewaterhouseCoopers' 2002 "HealthCast Tactics: A Blueprint for the Future," a survey among top executives of hospitals, health plans, physician groups, and policy makers revealed that 87 percent of respondents said it is important to reimburse providers based on quality data. Many health plans reported that they were just beginning to implement incentive programs as the programs prove their worth to encourage physicians to do more preventive care.

Another study shows that some markets are more ready than others to implement provider incentive plans. In a study released last year by the National Health Care Purchasing Institute, ten of 30 markets are cited as ripe for incentive plans. They are: Pittsburgh, Minneapolis, Boston, Los Angeles/Riverside, Buffalo, San Diego, Portland, Philadelphia, Sacramento, and San Francisco. Factors included in the ranking are positive experiences with incentive plans, high levels of health plan participation, and competition among primary care physicians.

A growing number of health plans are adopting financial incentives to reward physicians for practicing high quality medicine:

• Blue Cross Blue Shield of Massachusetts' primary care physician incentive program rewards physicians on such quality measures as breast and cervical cancer screening and cardiac, asthma, and diabetes disease management.
• CIGNA HealthCare of Georgia's "Reward for Quality" incentive program with Promina Health System, an Atlanta-based hospital system, is expected to begin in 2003. Developed with physician input, quality indicators will include such measurements as how long a pneumonia patient waits before receiving an antibiotic and whether patients diagnosed with congestive heart failure are given ACE inhibitors.
• Highmark Blue Cross Blue Shield's Quality Incentive Payment program rewards physicians in the Pittsburgh area for improvements in measures based on the Health Plan Employer Data and Information Set (HEDIS) for preventive screenings and treatment for chronic conditions. They include Pap smear, mammogram, diabetes care, and nephropathy screening. Highmark's program was started in 1993, and last year, 94 percent of 1,510 physicians earned almost $11 million in payments.
• Trigon Blue Cross Blue Shield of Virginia offers Performance Extra, a primary care physician performance plan that started in 1997. Physicians in the health plan's PPO and HMO who average more than 80 members are eligible for an additional per member per month payment (PMPM). Of 6,858 doctors who participated in the program in 2001, 2,486 physicians were paid a total of $6.1 million. Incentives are based on meeting targets for patient satisfaction and tobacco cessation, reducing sinusitis and rhinitis, and meeting HEDIS screening criteria for mammograms and well adolescent visits.

Health plans sometimes use the same performance measures because most physicians treat patients from multiple health plans and want uniform measurements. For example, Blue Shield of California is one of six health plans in California that are participating in a joint effort to use the measures for physician incentive programs.

Under "Pay for Performance," which is expected to begin in 2003, the California plans have agreed to measure and reward physician groups for improved patient satisfaction and clinical measures. The six participating health plans are Aetna, Blue Shield of California, Blue Cross of California, Cigna HealthCare of California, Health Net, and PacifiCare Health Systems.

"This represents potentially new money that would be paid as bonuses to groups for quality improvement," says Gifford Boyce-Smith, MD, Blue Shield's senior medical director of quality and network management. "The physicians participating will do well as the group's performance on quality measures improves over time."

Some of the health plans including Blue Shield already offer incentive plans, according to Boyce-Smith, but multiple health plans using different performance measures can cause administrative problems for physicians.

While the scorecards by which physicians will be rewarded haven't been finally crafted, the HEDIS-based measurements will include three chronic-care measures (asthma, diabetes, and coronary artery disease), three preventive and diagnostic measures (breast cancer, cervical cancer, and childhood immunizations), and a combined patient satisfaction score, Boyce-Smith says.

Driving Forces

Employers are one of the driving forces behind incentive plans. For example, the Leapfrog Group, a national consortium of Fortune 500 companies and public organizations, encourages hospitals and physicians to adopt quality-based measuring tools and technology.

Health plans that incorporate HEDIS-based measurements into their incentive plans also can be rewarded with higher scores when surveyed for accreditation by the National Committee for Quality Assurance. For example, one of Massachusetts Blues' goals is to improve HEDIS measures. Another goal is to measurably improve overall quality and delivery of preventive services.

"This (pay for performance incentive) program is quality-based with some pharmaceutical controls," says Jim Fanale, MD, chief medical officer for the Massachusetts Blues. "If you believe that improved quality can reduce costs, then if you diagnose people with breast or cervical cancer earlier, you can save money and save lives."

Michael Cropp, MD, Independent Health's chief medical officer and executive vice president, agrees. "If we improve the health status of our population, we will save money," he says.

But with a 20 percent annual membership turnover, Cropp says some health plans question whether long-term investment in incentive plans is worthwhile because many patients will leave the plan before actual savings take place.

On the contrary, Fanale says, "Quality-based incentive programs pay for themselves. We believe it is the right thing to do for members and physicians." In a 2001 survey conducted by Massachusetts Blues, 87 percent of physicians and 95 percent of office managers were satisfied with the program. In 2000, physicians earned total payments of $14.4 million, Fanale says.

Physicians rave about the program and the impact on their patients. "Before the incentive program, it was more hit or miss whether I got patients in for preventive screenings," says Louis Dusseault MD, an internist in Norwood, Mass., who participates in the Massachusetts Blues plan.

Dusseault says unlike some incentive plans that can be confusing, Massachusetts Blues clearly spells out how to attain incentives. "They give you a list of patients and you have six months to get them in and done," he says.

For example, some patients with asthma don't regularly take prescribed steroid inhalers, Dusseault says. "Through pharmacy records, the health plan tracks refills to check compliance," he says. "If a patient hasn't been taking the medicine, we get him in for an appointment and talk with him again about how asthma is supposed to be managed."

Dusseault says he estimates 50 percent of patients contacted either have forgotten to schedule screening tests or are prompted to do so when called. These phone calls help remind patients about the importance of making regular screening tests part of their routine health care.

"One patient we called came in for a mammogram and the biopsy showed she had cancer that was treatable," Dusseault says. "She is fine now, but she might not have been in for a year [without our call]."

After a year in the plan, Dusseault says he met all five of the Blues incentive criteria and earned the full bonus. "It was several thousand dollars, or about 4 percent to 5 percent of my income," he says.

Each health plan reimburses physicians differently. Independent Health awards physicians an additional PMPM amount for average performance and a larger increase for high performance in meeting quality measures. Overall, physicians can earn up to 10 percent of their overall office revenue.

Highmark physicians must achieve a minimum score that includes quality and member satisfaction measurements. Internists have eight HEDIS-based measures, family practitioners have 12 measures, and pediatricians have six. Points are also earned for night and weekend office hours and for submitting claims electronically.

Under the incentive program jointly developd by CIGNA HealthCare of Georgia and Promina, 1,500 physicians (representing about 50,000 covered lives) are expected to be placed into three payment categories for services rendered, with a 5 percent differential between each tier, says Mary Caulfield, MD, CIGNA HealthCare of Georgia's chief medical officer. The top payment tier is for physicians who exceed quality standards. Those physicians meeting some standards are in the second payment tier and those doctors that opt out of the system will be placed in the bottom payment tier.

The only concerns physicians have with the incentive plans are data accuracy and the administrative burden of tracking different plans, says Bangasser of the California Medical Association.

To assist clinics, Independent Health has a team of physicians that discusses process improvement with physicians, nurses, and office managers. "We provide physicians with the claims data and assist them with billing records," says Thomas Foels, MD, the health plan's associate medical director.

In some instances there are disagreements with preventive care guidelines. For example, Independent Health's Cropp says some doctors contend annual mammograms are not beneficial. "Sometimes they challenge the guidelines," he says. "We fall back on our physician advisory council and other studies for direction."

Robinson, the family practice physician, says he intuitively believes in the link between preventive care, disease prevention, and costs savings, although outcome studies haven't proven it to doctors. "It does, however, get us physicians to talk more with our patients about preventive care."