Providers embrace pay for performance program with Independence Blue Cross

July 15, 2011

Pennsylvania?s Independence Blue Cross (IBC) is changing the way it pays primary care physicians via its Integrated Provider Performance Incentive Plan (IPPIP).

Independence Blue Cross (IBC) of Pennsylvania is successfully rolling out a new, voluntary hospital/physician pay-for-performance program called the Integrated Provider Performance Incentive Plan (IPPIP). The incentive program is designed to improve quality and lower medical costs by incenting vertical integration, provider collaboration and care coordination among hospitals and specialists.

IPPIP replaces IBC’s previous hospital incentive program, which was designed to improve quality, but did not incent medical cost savings or include specialists.

“We believe that specialists, in part, were the missing link,” says Douglas L. Chaet, FACHE, senior vice president of contracting and provider networks at IBC in Philadelphia. “Most models don’t include the specialists. Because of their role in overall healthcare quality and reducing medical costs, we wanted to promote that. Not only did we embed that in the model, but the earnings are so substantial that we were able to get everyone’s attention.”

How substantial? Chaet says some of the programs carry an annual value in excess of $10 million.

“The targets are all customized,” says Chaet. “The model is all about performance improvement. So, rather than compare a provider organization’s results to a market or some national norm, we establish targets based on customized baselines for each provider entity.If for example, they have a historic rate of re-admission of 16%, then that's their baseline.”

Half of the rewards for physicians and hospitals are based on their medical cost management (MCM) performance. The MCM portion of IPPIP provides financial incentives to providers for reducing costs below pre-determined medical cost targets. If the provider’s actual medical costs are less than the targets, the provider earns an incentive, as the medical cost surplus is eligible for sharing between IBC and the provider.

The other 50% of the potential incentive payment is based on performance in three sets of quality measures: appropriate care measures, potentially preventable readmission rates, and hospital acquired infection rates.

“Over the last year, we have been successful in embedding this model in in all of our health system renewals as well as a few physician-only arrangements,” Chaet says. “The government has paved the way for these kinds of models. A lot of organizations are looking at ACOs, more so in the assessment stage that anything else. A lot of payment groups and hospitals view this as a good first step for them.”

Now that the program has ben embedded in so many agreements, IBC’s challenge is to ensure the providers are successful in its implementation, says Chaet.

“ Hospitals and physicians have an opportunity to earn more money, and our customers benefit when they do, as this will translate into improved quality and genuine healthcare savings,” Chaet says.

To that end, IBC is providing on site education for participating hospital and physicians to ensure smooth implementation.