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6 Large California Plans Link Doc Bonuses, Quality

In what's being touted as an unprecedented effort, doctors and hospitals in California will be rewarded with bonuses of at least 5 percent for quality under a common set of standards adopted by six HMOs.The six, Aetna U.S. Healthcare, Blue Cross of California, Blue Shield of California, Cigna, Health Net, and PacifiCare, are engaged in an effort to prevent medical errors.

The Los Angeles Times reports that the scheme is the latest in a string of innovative methods that plans and employers are using to shift the focus from costs to quality. For instance, New York-based employees of IBM, Xerox, PepsiCo, and Verizon will have access to a Web site that ranks local hospitals based on quality and performance measures.

As with the California initiative, the companies would provide bonuses to hospitals that meet performance standards.

"We think that 20 to 30 percent of health care costs can be reduced by minimizing mistakes and doing the procedure right the first time," Bruce Taylor, director of benefits planning for Verizon, told the newspaper.

Many large purchasers believe that focusing more on quality than only cost-containment will ultimately reduce costs, and works well in conjunction with strategies to transfer more health care expense — as well as control and responsibility — to employees.

"Tomorrow, employers will look to consumers to be the drivers of the health care system by giving them the quality information and the financial incentives they need to make better choices," Peter Lee, president and chief executive of the Pacific Business Group on Health, told the Times.

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