Positive Physician Incentive

Given the prevalence of capitation to reimburse physicians in southern California, and the negative incentives such as withholds that still are occasionally found there, a Medicaid HMO in Los Angeles is making modest positive payments totaling $2 million to medical groups for achievements in preventive care and clinical data gathering.

L.A. Care, with about 660,000 Medi-Cal lives in the city and county of Los Angeles, designed the bonus reimbursements as incentives for continuing improvement, says Lily Otieno, manager of medical administration. For example, a medical group or IPA might win an award for performance in the first quarter of this year on a HEDIS preventive care measure that is 5% above a baseline performance rate. To win an award for the second quarter, a group might have to push that rate up to 7% or 8% above the baseline rate, Otieno explains. The first checks under the program went out to providers in the first quarter.

In addition to HEDIS measures, the three other criteria for awards are improving the capture of encounter data, successful completion of the "Staying Healthy" or behavioral risk assessment tool, and improvement in provider-specific data. The encounter data awards are meant for payers, not medical groups. The behavioral assessment tool is required but not reimbursed by the California Department of Health Services (DHS), which runs the Medi-Cal program. Thus the awards are a way of paying for an effort that's required for Medicaid patients, but not commercial ones.

Among the criteria that were considered for these incentives, but were rejected at least for now, were passing a detailed site inspection of physician offices, serving as a test site for improvements in preventive care and data collection, and (for payers) helping to establish a master provider credentialing database.

L.A. Care does not directly reimburse groups or physicians, nor does it pay the bonuses directly. Rather, it provides care through seven commercial payers or "Plan Partners," such as Maxicare, Kaiser Permanente and Blue Cross of California, that carry global risk on the Medi-Cal patients. Six of the seven payers are running the incentive program. Those payers are working with about 130 groups or IPAs that are eligible for these incentives, employing more than 3,000 physicians who treat L.A. Care patients. Most of the groups have risk contracts with the payers.

L.A. Care has asked the payers to publicize the incentives to provider groups so that the latter will understand the program's goals.

The $2 million to be awarded is a relatively small amount compared to the $720 million in Medi-Cal revenues that L.A. Care received last year. The incentives amount to about $3 per patient. The size of the program was held down because L.A. Cafe's funds come from public sources, and because the program needed the approval of DHS and the California Department of Managed Health Care.

Otieno says the $2 million are "paid out of excess funds," or profit from a recent year. There's no current plan to continue these incentives in future years.

Contact Otieno at (213) 251-8300 ext. 4207.
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