Rethinking criteria for doctors’ pay

Times Staff Writer

Should your doctors’ pay be based on how well they care for you? Health insurers, including the federally funded Medicare system, think so.

They are making California a testing ground for standards that could eventually be used to rate all physicians in the country, rewarding them for keeping people healthy and costs down. Consumers could use the information to choose their physicians, and health plans could use it to determine pay or to drop low-performing doctors from their networks of providers.

For the record:

12:00 AM, Mar. 16, 2007 For The Record
Los Angeles Times Friday March 16, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 56 words Type of Material: Correction
Integrated Healthcare Assn.: An article in Business on Thursday about efforts to tie physician pay to performance said a voluntary program in California, called Integrated Healthcare Assn., had paid $145 million in incentives to doctors groups since it began in 2003. Health insurance companies that participate in the program pay the rewards directly to physician groups.

Proponents say such programs are needed to correct a system that now rewards doctors even if they run up patient bills with excessive treatments.

“We pay even if doctors make mistakes, run unnecessary tests and have to redo their work,” said Peter Lee, chief executive of Pacific Business Group on Health, a California coalition of employers that represent some of the largest buyers of health insurance in the state.


Currently there is no national set of performance standards against which doctors are measured. Many doctors warn that the standards must be carefully crafted or they could penalize good doctors. They point to performance measures recently introduced by some private health plans that have been heavily criticized as unfair.

Although health insurers have created their own performance measures, none has tied physician pay to such measures yet. But California is a pioneer with a state system that rates physician groups and financially rewards them with cash prizes for improving preventive care and patient satisfaction. This week, the state also joined a federal program to rate individual doctors.

“I keep telling doctors, no matter how good the food is at a restaurant, if the service is bad, the customers won’t come back,” said Donald Rebhun, an internist in Mission Hills and a medical director for Torrance-based HealthCare Partners, one of the largest medical groups in the state. It participates in a statewide program that rewards doctor groups for performance.

Late last year, the Washington State Medical Assn., a physician trade group, sued a local health plan that had tried to exclude some doctors from its network of providers based on its review of their performance. The suit is pending.


Blue Cross Blue Shield of Texas recently suspended rolling out its physician performance ratings because of negative reaction by the state’s doctors, who said the ratings were incomplete and unfair.

In both cases, the health plans mainly used insurance claims data to determine how doctors were performing. A physician might get a negative review for failing to administer preventive care, such as cervical cancer screening for an eligible female patient.

But there might be a reason why a doctor would not prescribe such a screening, said Jennifer Hanscom, a spokeswoman for the Washington State Medical Assn. The patient might have had a hysterectomy, for example.

Some doctors fear health plans may use performance standards to undermine their medical authority and reward doctors who provide the cheapest care.


“Our concern is that some of the plans may use efficiency as a code word for cutting costs,” said Cecil Wilson, an internist in Winter Park, Fla., and a chairman of the American Medical Assn.'s board. “Right now there is no good definition of efficiency, and looking at claims data doesn’t tell you the full story.”

A report appearing today in the New England Journal of Medicine shed further doubt on whether medical claims could paint a good picture of a doctor’s performance. Researchers from the Center for Studying Health System Change, a nonprofit research institution, looked at claims filed by nearly 2 million Medicare patients.

The report’s authors determined that in many cases, so many doctors had treated a single patient that it was nearly impossible to credit particular physicians for the outcome of the treatment.

Federal health officials acknowledge that claims information is incomplete, but they offer a starting point to measure doctors. This week they announced that California was joining five other states in a project that could eventually lead to national performance standards for physicians.


The program would analyze insurance claims filed by Medicare patients as well as by members of the state’s three largest commercial insurers, Blue Shield of California, Blue Cross of California and PacifiCare Health Systems. The claims would then be compiled to rate the performance of about 25,000 doctors in the state -- nearly the entire doctor population.

California already rates its medical groups through a voluntary program. The state is well suited for that because of the relatively large presence of health maintenance organizations, experts said. In HMOs, a group of physicians are paid a capped amount to care for a predetermined number of patients.

More than 200 doctor groups in California are part of the voluntary program, called the Integrated Healthcare Assn., which rates their performance and gives them financial rewards for improvement. Some of the state’s largest health insurers participate by funding the rewards. Kaiser Permanente, the state’s largest HMO, participates in the ratings but has its own internal reward program.

Integrated Healthcare Assn. has paid $145 million in incentives since it began in 2003, its officials said. They credited the program with increasing cervical cancer screenings by more than 60,000 in 2005 among its medical groups.