Incentive Payments Lead to Healthier Patients, Say Michigan FPs

March 09, 2015 09:24 am Michael Laff

Incentive payments for physicians who treat Medicare and Medicaid patients have been generating a lot of interest among policymakers lately, but one private insurer in Michigan has been offering performance-based primary care bonuses for several years.

Karen Mitchell, M.D., cares for a patient at Providence Hospital in Southfield, Mich., which receives 30 percent bonus payments from an incentive program.

In 2009, Blue Cross Blue Shield of Michigan began offering what it calls "tiered" payments for primary care. Primary care physicians under contract with the insurer can receive incentive payments ranging from 10 percent to 30 percent or more if they reach specific performance targets.

After the incentive plan was introduced, physicians were no longer eligible for annual fee increases. Three family physicians in the state told AAFP News that the changes have required more work and a willingness to change how they handle patient care, but they lead to better health outcomes.

The Michigan plan includes 4,400 physicians. To be eligible for the initial 10 percent fee increase, practices have to be certified as patient-centered medical homes (PCMHs). They can receive an additional 10 percent in per-member, per-month fees, 5 percent for reaching Healthcare Effectiveness Data and Information Set (HEDIS) measurements and 5 percent for providing team-based care.

Story highlights
  • Blue Cross Blue Shield of Michigan is offering primary care physicians incentive payments ranging from 10 percent to 30 percent if they meet specified performance targets.
  • Physicians in Michigan say the quality of patient care is improving because of the new payment model but note that the transition requires some heavy lifting.
  • Performance measurements require that physicians expand office hours and demonstrate fewer hospital admissions and better care for patients with chronic conditions.

Tom Simmer, M.D., senior vice president and chief medical officer at Blue Cross in Michigan, estimates that about 50 percent of physicians in the plan receive 20 percent to 30 percent bonus payments. Medical home practices in the plan recorded a 25 percent lower rate of hospitalizations for ambulatory-sensitive conditions. The program saved $155 million during its first three years, according to Blue Cross.

"They are providing more proactive care for patients, keeping them healthier and reducing the need for hospitalizations," Simmer said.

Blue Cross recently made subspecialists eligible for bonus payments, too.

"Primary care physicians believe this is strengthening them," Simmer said. "They have more authority when they are speaking with a specialist."

Karen Mitchell, M.D., is the residency director at Providence Hospital in Southfield one of the first practices that joined the new payment system in 2009. At the time, the most difficult task was learning all the medical home requirements, she said. Now the practice receives 30 percent in bonus payments, among the highest in the state for any practice.

Initially, the practice wanted to track patients who needed mammograms and Pap smears and monitor LDL levels among diabetic patients. It relied on insurance reports when the first electronic health record (EHR) system did not provide adequate support. Now the practice is on its fourth EHR system, which tracks the metrics better than insurance claims do.

"I see that it is valuable for patients, so it's worth it to do it, but making those changes is not easy," Mitchell said of the medical home transformation.

When determining performance scores, practices are judged based on immunizations, use of X-rays, HEDIS scores and ER visits for primary care-sensitive conditions. Hospital admission rates also factor into the calculation.

To combat obesity, the practice records every patient's body mass index at each visit. Staff members are beginning to take a more active role in making referrals for nutrition counseling. Overall, public health issues are becoming a greater priority.

"(The program) is asking us to do it for better patient care outcomes," Mitchell said. "That's what we should be doing. If we get a bit more money for doing what's right, that's great for health outcomes. If we're doing it for the right reasons, then it's worthwhile."

[Jennifer Aloff, M.D., standing next to computer and keyboard]

Jennifer Aloff, M.D., of Midland, Mich., says her practice uses bonus payments to reward staff.

The new payment model requires work beyond physician consultations with patients.

"We need to be paid for all of the services we provide, not just the face-to-face services," Mitchell said. "We need better payments. We're halfway there."

Jennifer Aloff, M.D., of Midland, noticed that quality of care and overall performance measurements have improved since her practice made the transition in 2010. ER and urgent care utilization rates are lower. Staff members devote more time to tracking which patients are keeping appointments for lab tests. Hemoglobin A1c levels and immunization rates have improved.

The practice, which includes four physicians and two physician assistants (PAs), receives an extra 20 percent for patient visits, which translates into $180 for an office visit instead of $150. She noted that the practice is doing better financially since it implemented the medical home model.

"We're better off than we were before. The bump in pay is helpful, but it's not the primary reason we chose to do it," Aloff said. "We chose it because it is a better way to deliver care for patients."

During the first year as a medical home, the staff at Aloff's practice relied on paper charts. Patient registries now have become the best source for monitoring overall health, better than claims data and even EHRs.

"To do effective PCMH care with paper charts would be very challenging," Aloff said.

Initially, the requirements to earn the bonus payments were routine, such as prescribing generic drugs and limiting radiologic testing.

The practice hired a part-time PA to handle data management, expanded office hours, and always has at least one physician on call.

A major change was arranging group visits for patients who have the same ailment, such as diabetes. The practice schedules a Saturday visit during which staff members educate patients about managing their blood sugar levels and set group goals for lab results. Blue Cross requires that practices offer the group visits, but the insurer does not pay for them as such. Instead, the practice bills for an evaluation and management visit for each patient.

Rose Ramirez, M.D., of Grand Rapids, Mich., says more practice-level incentives would encourage strong performance.

As a way to reward staff for the extra work, the practice earmarks the performance payment as a bonus for staff.

"It's not a handout," Aloff said. "It's definitely something you have to earn to get the (bonus) payments."

The practice is not part of a shared savings program, so it will face a stiff challenge if insurers continue to raise standards, and Aloff predicted that performance payments eventually will flatten out.

Rose Ramirez, M.D., is a solo practitioner in Grand Rapids who works with two full-time PAs and one part-time PA. When her practice became a medical home five years ago, the office stayed open an extra 10 hours per week and offered more open scheduling so patients with immediate needs could get an appointment on short notice.

Analyzing the transition with its increased payments and different approach to patient care, Ramirez said the incentives allow the practice to break even. Initially, the 5 percent to 10 percent payment increase for CPT codes 99213 and 99214 helped with the transition, which required that more staff be hired to implement the new performance measurements.

"I do think patient care has improved," she said. "We pay closer attention to diabetes patients to make sure they get their A1c (measured) on a regular basis. Our care manager reaches out to them."

Medical homes are often described as the first step in a long-term transition to networks of physician groups that cooperate to reduce costs. Ramirez predicts physician practices will move into tiered networks that grade and pay physician organizations based on total network efficiency, although she believes more incentives at the practice level would be preferable.

Ramirez said the first round of payment changes has benefited primary care.

"I appreciate the focus on primary care first," she said. "Providing financial incentives to primary care is very helpful because primary care physicians have a hard time managing their practice because the revenue is not what it is in the specialties."