Research: Health Groups Relying on Comp Incentives

November 2, 2006 ( - New research by a Washington, DC-based group showed that just over half of health maintenance organizations (HMO) used pay-for-performance in their contracts with doctors and hospitals in 2005.

That was a key finding of the study financed by the Agency for Healthcare Research and Quality, according to a Business Insurance news report.

Of the 52% of HMOs going in for pay-for-performance arrangements, nine in 10 included these incentives in their physician contracts, while more than one-third applied them in their hospital agreements, according to the study.

Pay-for-performance programs were most likely to be implemented by HMOs that use primary care physicians as gatekeepers to specialty care and capitation payment arrangements in which PCPs receive monthly payments based on the number of patients they see from a given health plan, according to the study.

One-third of the physician-focused pay-for-performance programs used by HMOs were designed to reward only the top-rated doctors or doctor groups, while nearly two-thirds offered rewards for attaining a pre-determined performance benchmark. Bonus payments for physicians averaged 5% of total health plan payments, according to the study.

Although 38% of HMOs said they used pay-for-performance programs in hospital contracts, nearly three-quarters of the HMOs said they relied on other measures of quality in their hospital pay-for-performance programs.

The findings are based on a survey by researchers at the Harvard School of Public Health and the Harvard Medical School in Boston of medical directors or directors of quality management at 242 HMOs in 41 US markets with at least 100,000 enrollees. The markets in the sample represented 91% of the US HMO enrollees and 78% of the US metropolitan population.