Measuring Medicaid performance: Chronic care beginning to play role in emerging P4P programs

July 1, 2007

More than half of all state Medicaid programs incorporate a financial incentive encouraging providers to deliver better quality care, according to a study by the Commonwealth Fund. In addition, the study finds that 70% of existing Medicaid P4P programs operate in managed care or primary care management environments. Nine Medicaid programs are joining with other payers, employers and providers in statewide or regional P4P efforts, which is an indicator that the Medicaid plans are keeping pace with HMOs-half of which are offering P4P programs of their own.

More than half of all state Medicaid programs incorporate a financial incentive encouraging providers to deliver better quality care, according to a study by the Commonwealth Fund. In addition, the study finds that 70% of existing Medicaid P4P programs operate in managed care or primary care management environments. Nine Medicaid programs are joining with other payers, employers and providers in statewide or regional P4P efforts, which is an indicator that the Medicaid plans are keeping pace with HMOs-half of which are offering P4P programs of their own.

The primary focus of state Medicaid P4P programs is shifting from preventive care measures to quality and cost issues related to chronic disease management, while health information technology is becoming more integral to these programs. With 52 million beneficiaries, 60% of which are enrolled in managed care, Medicaid plans have clear opportunities in developing P4P programs.

Tom Williams, executive director of the Integrated Healthcare Association (IHA), probably the earliest adopter of all P4P programs in the commercial world, says getting physician buy-in for P4P in Medicaid is the first challenge. "You have to bring them to the table to design measures and let them have a say in decisions about the program," he says.

Neighborhood Health Plan of Rhode Island, headquartered in Providence, started focusing on quality improvement in 2000 by following HEDIS measures, looking at member satisfaction and incentivizing primary care sites for achieving certain accreditation and certification programs offered by JCAHO.

Mark Reynolds, CEO, says that Neighborhood Health Plan would like to make money available to primary care sites, enabling them to change practice patterns to improve satisfaction. Falling into that category is reimbursement for health information technology, such as developing electronic medical records.

"It is important for us to align physician incentives with our goals as a plan," he says.

The Local Initiative Rewarding Results (LIRR) program, started in 2002, has tracked the effect of financial incentives on provider performance in seven California Medicaid managed care plans; each has chosen its own measures and payment methodologies.

Six out of the seven plans are at or above the Health Plan Employer Data and Information Set (HEDIS) Medicaid national average for well-baby visits and four out of seven are at or above the HEDIS national average for adolescent visits. LIRR has already paid out $5 million to 3,300 physicians. In addition, some of the participating plans offered incentives to members, such as movie tickets and money, to encourage them to seek necessary care.

LIRR PLAN INITIATIVES

Inland Empire Health Plan in San Bernardino, Calif., with 245,000 Medicaid beneficiaries, one of the seven plans in LIRR, began a modest program on its own in 1997 and revamped in 2000 and 2004. Its program is HEDIS-focused with incentives for immunizations, well-child visits, perinatal services, diabetes measures, Chlamydia screenings and for online asthma progress reports. Physicians are rewarded at the individual level. The next generation P4P at Inland Empire will be outcomes-based rather than event-focused.

"I believe that physicians should be motivated every day, not just at the end of the year, but literally when they bill the member. I know I am a lone wolf on this, but if physicians are paid in 30 days for a well-child visit, it will serve as an incentive to get the child into other preventive programs," says Bradley Gilbert, MD, chief medical officer.

The plan's P4P program currently pays out $12.5 million, up from $10.5 million in 2005, or 3.5% of Inland Empire's gross revenue. Dr. Gilbert says that doctors can earn as much as 20% to 25% of their income from P4P.

L.A. Care Health Plan, a community accountable health plan that serves nearly 800,000 Los Angeles County residents and another participant in the LIRR program, has put P4P programs in place for physicians, independent practice associations (IPAs), hospitals and with the four health plans with which it subcontracts.