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Home / News & IndustryManaged Care Insight and Analysis
Updated: May 24, 2011
Plans Underway To Design Performance-Based Contracting Program For Physician Groups

The Integrated Healthcare Association (IHA) has been awarded an 18-month, $281,000 grant to support the development of a performance based contracting program aimed to help health plans in California fairly and consistently measure the performance of physician group services for patients and use that information to support value-based performance payments.

IHA was awarded the 18-month funding by the Robert Wood Johnson Foundation (RWJF).

IHA said it will collaborate with the RAND Corporation to develop a method for combining quality and cost measures that will reflect "how efficiently and effectively physician groups organize and deliver all services for their patients." Each group’s performance would be adjusted to account for differences in their patient populations, such as age or the severity of illnesses, the association said.

Under such a performance-based contracting program, the IHA said health plans would determine annual performance payments to physician groups based both on the total cost of care and quality outcomes for each group’s patient population.

"Building on the foundation of our pay-for- performance program, this effort will merge both quality and cost measures to create a more comprehensive view of performance," said Tom Williams, executive director of IHA.

"Carefully constructed, the results will enable physician groups to differentiate themselves and for health plans to make value based contracting decisions that benefit consumers and reward high-performing providers," he added.

The performance-based contracting methodology being developed will use existing P4P measures (e.g., clinical quality, patient satisfaction, and use of information technology) and additional health plan information to determine a physician group’s total cost of care, the association said.

A range of scenarios will be modeled to assess its impact on purchasing and policy questions, such as:

  • How can different design features influence which groups will "win" or "lose"?
  • What methods can be used to structure incentives to reduce the likelihood of misclassifying a physician group’s performance?
  • How can performance-based contracting be structured to increase the incentives for improving either cost or quality deficiencies, while maintaining a group’s strengths?
  • Are different patient populations differentially affected by the various scenarios?

"The IHA effort will be one of the nation’s first to take value-based performance principles in healthcare and put them into actual practice on a large scale across multiple health plans," said Juan Davila, senior vice president of network management at Blue Shield of California.

"It is a new world for providers and health plans," he said. "One in which they must work collaboratively to foster better and more efficient care, replacing the traditional inefficient volume-based system with a patient-centered system focused on value."

IHA officials expect that the contracting system can be put into place by health plans beginning in 2012. California’s major plans including Aetna, Anthem Blue Cross, Blue Shield of California, CIGNA, Health Net, PacifiCare/UnitedHealthcare, Western Health Advantage, Kaiser Permanente (reporting only) currently participate in the IHA sponsored pay-for- performance program. The health plans contract with more than 221 physician groups that are responsible for over 10 million lives.

IHA was one of only 12 projects selected among 278 proposals submitted seeking a portion of the $3.1 million in RWJF grants to support novel approaches that address issues in value-based purchasing, quality improvement support, public reporting of provider performance, and data collection and aggregation for performance measurement.

Addresses: Integrated Healthcare Association, 300 Lakeside Drive, Suite 1975, Oakland, CA 94612; (510) 208-1740, Robert Wood Johnson Foundation, P.O. Box 2316, Route 1 and College Road East, Princeton, NJ 08543;

  This article was taken from:
Pay-for-Performance Reporter

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