Just a few years ago, pay-for-performance incentives for doctors were promoted as the next new solution to rising health care costs. Today, it’s clear they aren’t living up to expectations. For the most part, in the U.S. and in other countries, they’re not saving much money or significantly improving care. But one program serving three California counties might have found a way to make pay-for-performance pay off.
Many doctors contracting with non-profit health plan Central California Alliance for Health, with members in Santa Cruz, Merced and Monterey counties, suggest that the program is working.
The health plan’s pay for performance program offers significant financial incentives to practices, many of which are non-profit community clinics or county clinics. And the patient data and support Alliance is giving doctors helps them make changes in their practices.
Alliance’s program, called the Care Based Incentive, distributes bonuses based on a comparison among primary care practices. Practices serving Alliance’s members get quarterly profiles that show how well they are doing compared to each other and they are rewarded accordingly.
“It’s intelligently designed,” said Caroline Kennedy, Medical Director for the Monterey County Health Department Clinic Services Bureau. “You have to be better than everyone else.”
Physicians get more money for efforts such as minimizing preventable hospital and emergency room admissions, submitting claims electronically, and extending office hours. Alliance also gives financial bonuses to both physician practices and patients for steps they take to maintain health, such as creating asthma, weight and medication management plans and for getting more patients to do routine screenings for diseases like cervical cancer and diabetes.
Meeting measures like reducing ER visits is important to Alliance, since 85 percent of its 210,000 members in Santa Cruz, Monterey and Merced counties receive Medi-Cal. And it’s often lower income residents who end up in emergency rooms for basic medical care.
Because many Alliance providers are non-profit community clinics and county clinics, the bonuses have a big impact on them, sometimes totaling 10 to 15 percent of Alliance’s payments to them, said Dr. Richard Helmer, Alliance’s chief medical officer. Alliance allocated $8.4 million for the program in 2012.
“It’s not insignificant,” said Leslie Conner, Executive Director of the Santa Cruz Women’s Health Center, a nonprofit community-based clinic. Doctors there aren’t earning incentives individually, but some of the money is rolling into staff salaries and has helped fund two additional case managers and improvements to the electronic health records system, Conner said.
Some clinics are receiving $200,000 annually, Kennedy said. The incentives have become an important part of her department’s budget.
While the money is helpful, some clinics say the data generated is just as valuable. Conner’s and other safety net clinics meet quarterly to analyze the report cards they get to see who is doing well and why. One clinic, for instance, had good scores for immunizations. The reason: they take walk-ins, Conner said.
The incentives include a number of strategies for reducing preventable emergency room visits such as an asthma action plan drafted by the physician and patient. Patients track their asthma with a breathing device at home and the plan helps them dose their medication according to their lung capacity and directs them when to call the doctor to prevent an emergency.
From 2011 to 2012 asthma-related emergency department visits for Alliance patients dropped almost six percent, Helmer said.
Diabetes is another area of concentration. If a diabetic patient gets four screenings annually for hemoglobin, cholesterol, eye health, and nephropathy, the patient receives $50 and the physician gets $100.
Dr. David Simenson, a family practice doctor with Golden Valley Health Centers in Merced, said he personally and his organization are very much in favor of Alliance’s incentive program. However, he sees very few of his diabetic patients taking advantage of the incentives. He would love to see them used more.
Still, some physicians take issue with being penalized for patient behavior they feel they have little control over.
Dr. Donaldo Hernandez, a hospitalist for Palo Alto Medical Foundation, doesn’t receive Alliance’s Care Based Incentives because he’s not a primary care physician, but he takes care of Alliance members in the hospital.
Alliance has the challenge of a patient population with a lack of resources, and sometimes a lack of a support system, he said. If they get in trouble healthwise and there’s no one at home to look out for them, they end up in the ER and the doctor gets blamed, Hernandez said. It’s difficult to measure and incentivize the effort a doctor puts into those cases, he said.
One Santa Cruz County primary care physician contracting with Alliance says diabetes, high blood pressure, high cholesterol and obesity are illnesses that need to be addressed on a national public health level directed at dietary and lifestyle changes.
“A lot of this is beyond the control of the doctors on the front line,” he said, asking not to be named while criticizing the health care plan that pays him.
Because doctors in his office take care of their patients in the hospital if needed, they tend to have some of the sicker Alliance patients, he said. Other offices depend on hospitalists to do that. But there are no incentives in the program to take on those sicker patients, he said.
Dr. Robert Berenson, a fellow with the Urban Institute, a Washington D.C.-based non-profit policy research organization, agrees that many of these incentive programs don’t encourage doctors to take chances with sicker patients or to report adverse effects in medicine.
“Internationally, pay for performance hasn’t proved to be a terribly successful approach,” he said. But he likes the idea of strategies like Alliance’s asthma action plans and other preventative measures. And he said the success of an incentive program depends heavily on doctor buy-in.
Despite the growing number of pay-for-performance programs for primary care physicians in a number of countries, there is “little rigorous evidence” of their success in increasing health-care quality and decreasing health-care expense and more research needs to be done, the Cochrane Collaboration reported in 2011.
But hope is still alive that rewarding performance rather than volume of care can improve care and reduce costs. Even the Centers for Medicare & Medicaid Services rolled out its version of a pay-for-performance program planning to allocate $850 million in 2013 to hospitals if they can improve clinical processes and patient satisfaction.
If those programs are similar to the one Alliance has put in place, they might succeed. The health plan routinely wins first and second place in the California Department of Health Care Services Medi-Cal Managed Care Quality Awards. Last year it received the silver award out of a pool of more than two dozen health plans.
But the quest for quality is a journey, not a destination, Helmer said.
“The really great organizations like Southwest Airlines and Toyota are always saying we can do a better job. That’s the way the health-care industry should be.”