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Blue Cross of California announced a shifted in focus almost entirely to patient satisfaction and quality medical outcomes. Jamie Court, the director of the Foundation for Taxpayer and Consumer Rights; and Michael Chee of Blue Cross of California talk about this change.

BRIAN NELSON, CNN ANCHOR: The Blue Cross announcement has a lot of folks in California talking about it right now. Joining us from Los Angeles are Jamie Court, the director of the Foundation for Taxpayer and Consumer Rights; and Michael Chee of Blue Cross of California.

Let’s start with you, Mr. Chee. Why don’t you explain how this all came about and what is it supposed to do? Get the government off the back of HMOs?

MICHAEL CHEE, BLUE CROSS OF CALIFORNIA: Well, it actually has nothing to do with that. This is a culmination of basically 12 months of research and development by Blue Cross of California to create an evolution in our bonus program for physicians.

But the sea change that has taken place here is really that we have eliminated the financial incentive to maintain cost controls and to limit any utilization of medical services, and have shifted our focus almost entirely to patient satisfaction and quality medical outcomes.

NELSON: All right, let’s go to Mr. Court. Jamie Court. Is there an elimination of financial incentives? Is that what this is all about? Are patients going to be happy?

JAMIE COURT, CONSUMER ADVOCATE: No. In fact, I was at a press conference and questioned Blue Cross about this yesterday. Blue Cross will continue to pay doctors in a system called capitation. This is a fixed rate for every patient. So physicians get a fixed budget, could be as low as $30 per patient per month, regardless of whether the patient is well or sick. The doctor has to treat that patient out of that budget.

This is a 10 percent bonus plan, separate from that system. And so under that capitation system, doctors get paid more money to provide less services for patients. It is a financial conflict of interest.

NELSON: What you are saying…

COURT: Only these physicians are the ones who are getting this bonus to the physicians who are on this capitated plan.

NELSON: That’s what i was going to say, Mr. Court. The — things for the patient do not change, right? It’s just the doctor to benefits.

COURT: I think the doctors aren’t going to be able to change their practices enough. You know, eight out of ten physicians groups in California are in dire financial circumstances according to the Medical Association because these rates paid by the HMOs are too low.

I don’t think it will result in any tangible change for the patient, unless we have a patients’ bill of rights because the ultimate determinative and measure of quality is how much money doctors have to take care of their patients. And what we know at Blue Cross is that 23 cents of every premium dollar is spent on corporate overhead profit, not patient care.

And we have to change that system to get money to patients, not provide an extra 10 percent bonus linked to patient satisfaction, pooling and surveying actually patients who are not the most chronically ill. There’s a survey only of all patients, not just the sickest.

NELSON: Let me go now over to Mr. Chee. How will patients benefit from this? Do you want to explain that to us?

CHEE: Sure. Patients will benefit from this because this is about restoring balance back in the health care system. For the past several years, there has been criticism of the managed care system that cost controls and utilization controls interfere directly with the doctor-patient relationship.

And in fact Mr. Court himself can be quoted as saying that those types of financial incentives are not in consumer’s best interest. So with the elimination of this incentive, we find it is hard to see where the argument could be. And when we are hearing from such massive amounts of consumers, doctors, and employer group purchases, that this is exactly what they want to see happen in the health care system.

We have seen unanimous agreement in the past 24 hours, now that our announcement has been out here, that everybody agrees this is a step in the right direction. But it’s just the first step.

NELSON: But you are not changing the ceiling or the cap you are putting on the kinds of treatments that patients can expect.

COURT: This is not an incentive related directly to capitation payment to physician groups; this is about the bonus they can earn over and above that. And that has been the focus of attention over the past several years as being not conducive to delivery of quality of care.

So we have eliminated the barriers in that bonus system to focus exclusively on satisfaction and quality outcomes.

NELSON: Mr. Chee, how do you keep the patient happy, then? How do you expect the doctor will actually do this in practice?

CHEE: Well, that’s what we hope to see play out in the coming years. What we hope is that there will be more investment of time by physicians in interacting with their patient. We hope the patient feels that their disease management is more actively engaged in so that they are diagnosed sooner with better equipment, with earlier interventions.

Because we know the most cost effective care in the health care system is when medical services are provided at the right time at the right place, and not late in the game when a disease has had time to evolve.

NELSON: OK, let’s go to Jamie Court once more.

COURT: Well, I think that this is clearly a response to the patients’ bill of rights and I think if we enact the patients’ bill of rights, what we will see is those capitated rates paid to physicians come up. The reality is, this plan gives physicians who have a great financial incentive, capitation, a small bonus on patient satisfaction.

And the reality is, when doctors get and pediatricians in L.A. get ten dollars per kid per month to take care of all their health care needs, including vaccinations, you can’t do it all and make ends meet. And we need to up that rate. And I think if the federal patients’ bill of rights is enacted by Congress, we will so those rates go up, because HMOs will be liable when patients don’t get the care they need.

NELSON: All right, Blue Cross of California paying bonuses to their doctors to make sure they treat their patients well, and keep them happy. Thank you both for talking to us, Jamie Court, the executive director for Foundation for Taxpayer and Consumer Rights; and Michael Chee from Blue Cross of California.

Thank you, gentlemen.