California HMO will give bonuses for patient satisfaction rather than cost savings

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The Associated Press

Blue Cross of California, one of the state’s major health maintenance organizations, said Tuesday it will begin financially rewarding doctors for patient satisfaction rather than holding down costs.

Blue Cross officials characterized the switch as market-driven, but health care industry watchdogs were skeptical of the action, which comes amid congressional debate over a patients bill of rights.

“This is clearly an attempt to pre-empt legislative action and the message to politicians is: beware,” said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights. “We’ve heard these claims before and they have often proven to be little more than cosmetic changes at other companies.”

Dr. Jeff Kamil, medical director of 2.2 million-member Blue Cross of California, said revision of the bonus plan was in the works for a year and was not related to pending legislation.

“We are responding to consumer and market demand,” Kamil said.

The new method of paying bonuses is not expected to cost more than the former method but the company is not opposed to paying more “because hopefully it will mean better patient care,” said Michael Chee, spokesman for Blue Cross of California.

Most of the 20,000 physicians under contract with Blue Cross of California will not have to make major changes in their policies, Chee said, and the program will apply to primary care doctors as well as specialists.

Todd Richter, a managed care analyst at Banc of America Securities in New York, said he didn’t believe the plan will have a significant effect on the HMO’s bottom line but that it would probably go a long way to improving its image.

“It is an industry with a perception problem so companies are trying to do things to improve patient satisfaction,” Richter said.

Quality is difficult to measure, he noted, but it is easy to measure patient satisfaction.

Chee was confident that Blue Cross of California was alone in eliminating cost management as a measurement for doctors, but other major health care organizations contended that Blue Cross is merely doing what they have already been doing.

“I would say, welcome to the club,” said Dr. Oliver Goldsmith, medical director for Southern California Permanente Group, the physicians group for 3 million Kaiser Permanente members in Southern California. “To recognize physicians’ performance based on service and quality is a good thing.”

Goldsmith said Kaiser has for years used “incentive dollars” to raise performance.

“It’s astonishing the success you can have,” Goldsmith said.
Blue Cross Blue Shield of Missouri uses a hybrid system that rewards doctors for both cost savings and patient satisfaction. Doctors don’t get a bonus if they meet financial goals but fail to register highly on patient satisfaction.

They will, however, get the bonus for patient satisfaction without meeting financial goals.

“A lot of these HMOs are Johnny-come-latelys. They are doing today what we did in 1996,” said Herb Schneiderman, senior vice president of medical delivery systems.

Ben Singer, vice president of public relations for Pacificare, said Blue Cross‘ linking of quality with financial incentives isn’t new, but what sets it apart is the weight it gives such quality measures among overall incentives.

But keeping costs down will “always be a part of the equation in health care,” he said.

Blue Cross of California, a subsidiary of WellPoint Health Networks Inc., is the state’s fourth largest health maintenance organization.

WellPoint reported net income of $96.5 million on revenue of $2.6 billion for the quarter ended March 31, compared with $79.6 million on revenue of $2.1 billion in the same quarter last year.

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