Technology firms pushing tech bonus pay for doctors

Three major companies have rolled out a pay-for-performance program in northern California to accelerate doctor adoption of information technology.

By Tyler Chin — Posted Feb. 27, 2006

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Three nationally prominent technology firms have launched a new initiative to financially reward doctors who use technology to share information and improve care.

Under the Silicon Valley Information Technology Pay-for-Performance Consortium initiative, Cisco Systems, Intel and Oracle plan to offer a total of $1.05 million to seven participating medical groups and independent practice associations in northern California that treat a large number -- 5,000 to 10,000 -- of the technology companies' employees.

Based on how the groups use technology for evidence-based care, care management and patient education, Camino Medical Group, Kaiser Permanente, Palo Alto Medical Foundation, San Jose Medical Group, Santa Clara County IPA, Santa Cruz Medical Foundation and Stanford Hospital and Clinics each could earn up to $50,000 in extra pay from each technology company -- up to $150,000 total, said Jeffrey Rideout, MD, Cisco's corporate medical director.

"The main goal of the program is to accelerate adoption and use of proven health information technologies such as electronic medical records and electronic prescribing," Dr. Rideout said. He said the technology companies did not form the consortium as a way to get the medical groups to buy their products, which generally are the electronic guts of a computer or the Internet.

Separate but coordinated

Their pay-for-performance initiative also is meant to supplement the pay-for-performance program administered by Integrated Healthcare Assn. of Oakland, Calif. In 2003 and 2004, 225 medical groups and IPAs in California collected nearly $90 million in bonus payments from seven insurers sponsoring the IHA program.

Although separate, the programs are coordinating efforts. "We're working with the same medical groups, and what we want to do is sync up our [information technology] measurement sets," said Tom Williams, IHA's executive director. "I think it's fantastic that employers are embracing the concept of providing financial incentives to physician groups to adopt information technology."

Both initiatives are using information technology standards developed by the National Committee for Quality Assurance, a Washington, D.C., nonprofit organization best known for evaluating health insurers, to assess performance of physician groups. But IHA is using a smaller subset of those standards, which are called Physician Practice Connections, while the technology consortium uses a much larger set that IHA plans to adopt eventually.

Another major difference is that the information technology component of the Silicon Valley consortium accounts for 50% of a practice's score, compared with 20% under IHA's pay-for-performance program.

"This is a much smaller program [compared with IHA] in terms of both the dollars available and number of medical groups involved," Dr. Rideout said. "It's not meant to be anything other than a supplement to work IHA is already doing."

To receive their bonus money, physician groups must pay $1,000 to $3,000 every three years to receive NCQA certification, Dr. Rideout said.

Ronald Bangasser, MD, chair of IHA's technical committee, said that if creating incentives to improve physician adoption of information technology is "what their direction is, then I think that's a great idea." Dr. Bangasser is a member of the California Medical Assn.'s Council on Quality Care and a family physician and director of external affairs at 155-doctor Beaver Medical Group, Redlands, Calif., as well as secretary of the AMA Foundation and a member of the AMA Council on Medical Service.

If the companies are the beneficiaries of the improvement resulting from physician use of technology, "they definitely should be putting their money where their mouth is, and they are," Dr. Bangasser said.

Employers getting into the game

The technology companies' initiative is among a handful of pay-for-performance programs around the country sponsored by employers. Fewer than one-half dozen of the 117 pay-for-performance programs in the country are employer-sponsored, said Geoffrey Baker, CEO of Med-Vantage, a San Francisco-based company that monitors pay-for-performance issues and sells quality measurement software to health plans.

The number of pay-for-performance initiatives has grown from 35 in 2003 to more than 100 in 2005, Baker said.

He predicts that the overall number of programs could reach 160 by the end of the year. "Folks are experimenting with various approaches to ... to see what works and what does not," Baker said.

Although Cisco, Intel and Oracle are well-known companies, Baker does not expect that their effort will lead to an avalanche of other self-funded employers offering financial incentives directly to physicians to get them to adopt technology.

That's because employers already have been working to offer pay-for-performance indirectly through national health plans and will continue to take that approach, Baker said.

Plans have a huge number of covered lives around the country, while most large employers' employees are scattered all over the country. As a result, national health plans' initiatives have a much bigger impact than do most large employers' initiatives, he added.

Still, he expects the technology consortium initiative to have a meaningful impact, because the work force of the three founding companies is highly concentrated in one region.

"Is that transferable or applicable to the rest of America? No, it's not. But for the Bay area ... that's a great program."

Meanwhile, existing pay-for-performance programs are continuing or plan to expand.

IHA, for example, said in early February that its goal is to increase the level of financial incentives that participating insurers offer from 1.5% of physician income to as much as 10% in five years.

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Higher incentive

Over the past three years, the number of insurers and employers around the country offering financial incentives to improve quality and to encourage doctors to implement information technology has soared, according to Med-Vantage, a San Francisco-based company that sells pay-for-performance quality measurement software to insurers.

Patients covered
2003 35 30 million
2004 84 39 million
2005 117 53 million

Source: Med-Vantage

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External links

National Committee for Quality Assurance's Physician Practice Connections on technology measurement standards (link)

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