HMO Decides to Reward Patient Satisfaction, Not Cost-Cutting

Wait a minute. You mean to tell me that quality of care wasn't my HMO's first priority all along?

In a major policy shift, Blue Cross of California announced Tuesday that it will link the bonuses it gives to physicians groups to patient satisfaction instead of to effective cost-cutting.

We know what you're thinking. But according to Blue Cross, the change is not a reaction to the Patient's Bill of Rights proposals being debated on Capitol Hill. Jeff Kamil, Vice President and Medical Director of Blue Cross of California, says the HMO, which represents 2.2 million patients, began work on the proposal more than a year ago, not in a recent act of preemptive self-regulation.

"We changed our policy based on demand from employer groups, from individual members and from our medical groups, who are anxious to be measured in terms of their quality," Kamil says. "We looked to restore balance to the health care system. Employers want higher value for their dollar and better care. If we raise the satisfaction of individual members, if they get better care — preventative care and monitoring of chronic illnesses — people will have more trust in the system and stay in it."

The plan has been met with enthusiasm by medical and employer groups, according to Kamil. The doctors especially like it, he says, because "it puts the control directly in hands of the medical group — they can control their reward."

The new policy will take various factors into account when evaluating physicians groups, including patient surveys, exit interviews with patients who are switching doctors, as well as the quality of preventative care. Groups that perform well will receive a bonus of up to 10 percent of their quarterly payments — a fillip that was previously linked to much money the group had saved.

It sounds revolutionary, but in fact Blue Cross of California is not the first HMO to make such a move. Dr. Harold Hunter, professor and Director of Health Care Administration at California State University, Santa Barbara, says a similar change by UnitedHealthcare (a national HMO based in Minnesota) provided some evidence to Blue Cross that the change wouldn't be a financial disaster. And Hunter says the outcome of the decision will be good for patients, at least for the time being.

"It's going to make the doctors happier because they can practice medicine the way they were taught, without withholding care," he says. "Most importantly, it's going to make the patient happy, and make them feel like the doctor is their advocate, not a tool of the insurance company."

But the benefits may be short-lived, Hunter warns.

"As of now it's a good thing," he says. "My skepticism aside, it's going to lead to an improvement in patient care. I'm just concerned that eventually those same improvements may increase the price of the care. What I fear is that we're at a point where we can expect a lot of increases in premiums for the next year or two.

"The people who buy health care will see their bills going up and say 'do we really want this?' There's an uneasy dynamic between keeping prices of premiums down and improving the quality of care."