Medical insurer ties staff’s pay to the health of policyholders

Times Staff Writer

The nation’s largest health insurer said Tuesday that it would tie some compensation of its employees to the well-being of patients.

WellPoint Inc., which has 34 million insured members nationwide, including 8 million in its Blue Cross of California unit, said its employees would receive larger bonuses if health plan members increased their use of preventive practices such as immunizations, cancer screenings and diabetes-management tools. If successful, the plan could reduce healthcare costs and possibly increase WellPoint’s profit in the long run.

Health insurers and the federal government have been pushing for ways to tie the compensation of doctors and hospitals to how well patients fare. WellPoint is believed to be the first health plan to apply that standard to its employees.


The central component of WellPoint’s program is a “member health index” -- a complex formula that measures and tracks patients’ overall health levels, including how often they ended up in emergency rooms, how often they received preventive care and whether they were taking needed medications, such as cholesterol-lowering drugs.

But some consumer advocates and physician groups are skeptical. They contend that WellPoint’s program could be used to identify the sickest patients so that their premiums could be raised or their coverage canceled. They cite a finding by state regulators that Blue Cross of California illegally dumped individual policyholders after they incurred hefty medical bills. WellPoint, which the regulators fined $1 million, has denied the allegations.

“It makes you wonder,” said Arthur Levin, director of the nonprofit Center for Medical Consumers, a New York-based advocacy group. “Why are [WellPoint] employees being rewarded for doing the right thing in the first place? Shouldn’t prevention be the standard of care, not something you reward?”

WellPoint said the new reward program represented a commitment to the health of the insurer’s members.

“It is a good investment and it is the right investment to make,” said Sam Nussbaum, WellPoint’s chief medical officer. The program “will give us a new set of knowledge in the management of diseases.”

The program comes as a growing number of employers and health plans are offering cash or prizes to get people to participate in wellness programs designed to get people to do such things as go to the gym, lose weight or quit smoking.


Many of these and other efforts have focused on controlling the epidemic of largely preventable chronic diseases, such as hypertension and diabetes, that are closely linked to obesity. Nearly one-tenth of the country’s $2-trillion annual medical bill goes to treat chronic diseases related to obesity, according to the federal Centers for Disease Control and Prevention.

In the case of diabetes, WellPoint employees would be rewarded if more plan members underwent care believed to help prevent blindness or limb amputations, common complications of the disease.

At the front lines of the program will be WellPoint’s nearly 2,000 nurse consultants who are charged with tracking claims and talking to patients about needed and available care. Starting with a baseline index, the company hopes to increase performance over time.

For example, of WellPoint’s 700,000 members who are diabetic, only about 15% receive all the preventive care and exams they should. The goal for the end of 2007 is to bring that up to 20%, Nussbaum said.

If that goal is met along with other targets, every one of WellPoint’s 42,000 employees would get a payment equal to 5% of their potential overall bonus. Other parts of the overall bonus are based on such measures as company profitability and membership growth. WellPoint declined to disclose the size of past bonuses.

Skyrocketing healthcare costs have spurred initiatives such as performance-based pay for providers. But there is no widespread consensus on how performance should be measured. Some doctors contend that such proposals are nothing more than attempts to force doctors to provide less medical care or to cut their pay.

Some industry leaders applauded WellPoint’s effort as an example of health insurers’ taking a more active role in managing health rather than just paying claims.

“Just treating disease is not going to significantly impact the health of the population or the cost of healthcare,” said Susan Pisano, a spokeswoman for trade group America’s Health Insurance Plans. Pisano said she was not aware of other programs like it in the country.

But not everyone was convinced of WellPoint’s motivations.

WellPoint’s member health index can go up if health levels improve but also if sick members drop out, said James Rohack, a cardiologist in Temple, Texas, and member of the American Medical Assn.’s board of trustees.

“If a small employer who has sicker-than-average workers were to drop out because WellPoint premiums are too high, guess what? Your index just got better,” Rohack said. “And for uninsured people who need healthcare, with this index, WellPoint would have no incentive to sign them up” if they will bring the index down.

“Although we are supportive of promoting healthy lifestyles and preventing disease,” Rohack said, “we also recognize that a company that bases its performance on quarterly profits may not be patient enough for long-term investments to pay off.”

WellPoint spokesman James Kappel dismissed the skeptics, saying “the bottom line is this program is designed to improve our members’ health.”

WellPoint employees welcomed the program. Linda Hudgens, a WellPoint nurse consultant based in Virginia, said the rewards were a nice recognition of the efforts that she and her colleagues made.

But, because she already emphasizes patient wellness, she said, the program “won’t change what I do.”