Insurers, employers talk quality while targeting physician pay

Health insurers and employers are pushing what they call "physician payment reform" in an effort to keep costs down and quality up.

Simply put, "physician payment reform" is a catch phrase that refers to paying physicians based on quality measures and episodes of care, rather than a fee-for-service system. It's not a new idea. But physician payment reform -- intended to be a step up from terms such as "pay-for-performance" -- is gaining traction as more authorities in the health industry declare that no improvements in quality or costs will come without fundamentally changing how doctors are reimbursed.

"How we pay is probably the next real big issue we have to focus on. Payment reform has to be a big part of our future agenda," Cristie Travis, executive director of the Memphis Business Group on Health, an employer coalition. She was speaking at an Oct. 13 news conference for the release of the National Committee on Quality Assurance's annual State of Health Care Quality report.

The 162-page report, which looked at claims data from more than 1,000 health plans representing 118 million Americans, declared that spending more money on health care did not automatically lead to better health. "We must contain costs and create a system based on value, not volume," NCQA President Margaret E. O'Kane said at the news conference, where she was joined by health plan and other payer representatives.

In a phone interview after the news conference, Travis told American Medical News: "We see the physicians as, to be honest, the pivotal providers that have an impact on the cost and quality of care." But she added that measuring performance and giving physicians their scores won't do enough.

"Performance measurement and public reporting alone are not going to be sufficient to get the types of improvements we want. We really need to realign how we pay," Travis said.

Not a brand-new idea

Talking about changing the way physicians are paid to promote better and more efficient use of health care is an idea that has been tried before.

Capitation -- paying physicians on a flat per-patient, per-month rate, rather than paying per encounter -- was a big idea in the 1980s and 1990s. It took root in some areas, but died out in most places as physicians rebelled against a system they said rewarded them for merely keeping costs down, not keeping quality up.

The NCQA does not lay out a specific strategy on using physician payment as a way to increase quality. Instead, the report noted that a nuanced approach was needed to find a way to deliver health care efficiently -- and well.

Because the NCQA report focused on health plans and payers, physician organizations were not speaking at its news conference. However, doctors were on the minds of those who were there.

"We think the future for quality improvement efforts is working with physicians," said Jeffrey Kang, MD, chief medical officer for Philadelphia-based insurer Cigna.

Later at the NCQA news conference, Dr. Kang talked about the need for health plans to decide on uniform measures and methods for determining the relative quality of a physician.

"There is an emerging consensus between all payers that we have to agree to a common set of metrics. We need to send the same signal to the doctors in terms of what quality means," he said.

Some payers, including Blue Cross Blue Shield of Massachusetts, have tried to revisit capitation but pair it with pay-for-performance and more precise quality measures. That new model has been referred to as global payment, and the Massachusetts Legislature could consider a bill in 2011 that would install such a system in the state.

Other health plans have tried to influence physician payment through tiered networks, in which physicians rated as higher quality are put in a plan that is less expensive for members to access, giving those physicians a larger potential pool of patients.

Meanwhile, government agencies are discussing how to set up accountable care organizations, in which physicians and hospitals group together to track care for a large, specific group of patients -- and get paid a bonus if they reach certain quality measures. Beginning in 2011, physicians who report quality information to Medicare can receive a bonus.

Quality measurements differ

The problem physicians most commonly have with these efforts is with the accuracy, fairness and validity of the measurements health plans use to assess doctor quality. The American Medical Association-led Physician Consortium for Performance Improvement has developed more than 270 quality measures.

But physician organizations say that instead of using true quality data, payers have used only insurance claims data to populate quality reports. Then there's the challenge of appropriate risk adjustment, and the problem of how to assign care when more than one physician in a practice cares for a single patient.

Research funded in part by the U.S. Dept. of Labor and released by the RAND Corp. in 2010 showed that quality rating programs misclassify physicians as often as 22% of the time. The research supports physicians' concerns about quality reporting and pay-for-performance programs already in place.

For that reason, physicians say pushing insurers to base what they pay doctors on these kinds of quality measurements could be disastrous. Some state medical societies are trying to get insurers to back off flawed rating programs that could be used as precursors to new payment schemes.

For example, the California Medical Assn. in September sued Blue Shield of California over the insurer's Blue Ribbon quality designation program, which physicians said was misleading. The CMA had been a part of a consortium working with Blue Shield before dropping out. Blue Shield said it stands by its data.

Physicians' frustration with quality reporting and payment reform in some cases is heightened by accompanying demands on their finances and time.

However, payers said physicians should understand that as pressure to contain health care costs goes up, so will scrutiny of how doctors get paid.

Travis said it's fair for a physician to ask if, say, they are getting a return on their investment in information technology. But she said it's also fair for payers to ask if they are getting a return on their investment in physicians.

"I think it would be unreasonable to ask a physician to invest in an infrastructure they didn't know they were going to get paid back for," she said. "It's equally wrong to ask an employer or health plan or consumer to pay more if they don't know if they're going to get more for their money."