Pay for Performance: Mix the Right Ingredients


WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., suggested at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. "Most patients rate their doctor a four out of five, but they hate the health care system."

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued.

A new program in California has yielded positive results, and is "certainly one way to pay for quality," Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings "by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight," said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group L.P., at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA, in turn, acted as a "neutral convener," in coming up with standards for reporting the data, he said.

Technical and steering committees were formed to work with technical experts on proposing measures.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California.

"They also had to get harder over time," Dr. Bangasser said.

In the IHA program, physicians get paid not just for performance, but also for performance improvement. "We actually have a calculator [that determines whether] people are improving," he pointed out.

The first payout took place in 2004, based on first-year data from 2003.

Physicians in the program are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and information-technology measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, "only two-thirds of them got full credit for it. It showed us that we had a huge IT deficit."

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list that details the specific diagnoses of each patient.

Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries "are doing much better on these measures than groups that don't."

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes, he reported.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited access problems to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said.

There were some concerns about increased utilization and cost of services for groups participating in the program, and what the long-term returns on investment would be.

It was also determined that groups serving large Hispanic or Native American populations should get "extra credit" for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said.

"If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior," Dr. Bangasser said.


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