Although a recent article in the Wall Street Journal described many companies' efforts to link employees' performance to their salaries as "lackluster," Hill Physicians Medical Group in San Ramon, Calif., has reason to crow. The group, with more than 2,100 physicians, paid those physicians $12 million in bonuses. Included in the distribution was $5.6 million that the group received from the statewide Pay for Performance Initiative. The Hill bonuses are calculated using a series of clinical and service indicators that measure results.

"Hill paid out twice the amount as the state plan because the medical group program is older and more mature," says Steve McDermott, Hill's CEO. "We're much more committed to it. Health care requires a business-oriented approach. Pay-for-performance relies upon results, and as we move closer to a consumer orientation, we should be more results-oriented."

According to the Journal, 83 percent of companies with some type of pay-for-performance program report that this approach is only somewhat successful or not working at all. The California Pay for Performance Initiative, launched through the Integrated Healthcare Association (a group of health plans) in January 2003, initially met with difficulty. That's because medical groups expected about a 9 percent increase in capitation rates but, through the program, insurers were only offering 6 percent, with the bonus making up the difference. But after nearly two years of experience, most medical groups support the statewide program.

Hill took pay for performance further, says McDermott: "Health plans should budget a fixed amount for pay for performance independent of capitation negotiations. Purchasers should build it into their negotiations with plans, so when plans ask for a rate increase from purchasers, purchasers can identify a certain portion for pay-for-performance funding. For medical groups, a certain portion of pay-for-performance earnings should be set aside for internal programs," says McDermott.

McDermott advises other medical groups contemplating compensation schemes to use performance indicators, but to adapt and build the program gradually. "The danger is taking a good idea like this and trying to execute it overnight. It's a matter of building this gradually to create comfort and trust in the physicians as to the reliability of the data set and the appropriateness of the metrics."

SOURCE: 2003 ANNUAL REPORT, HILL PHYSICIANS MEDICAL GROUP

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

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The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.