Incentive Payments Lead to Healthier Patients, Say Michigan FPs

Incentive payments for physicians who treat Medicare and Medicaid patients have been generating a lot of interest among policymakers lately, but one private insurer in Michigan has been offering performance-based primary care bonuses for several years.

In 2009, Blue Cross Blue Shield of Michigan began offering what it calls "tiered" payments for primary care. Primary care physicians under contract with the insurer can receive incentive payments ranging from 10 percent to 30 percent or more if they reach specific performance targets.

After the incentive plan was introduced, physicians were no longer eligible for annual fee increases. Three family physicians in the state told AAFP Newsthat the changes have required more work and a willingness to change how they handle patient care, but they lead to better health outcomes.

The Michigan plan includes 4,400 physicians. To be eligible for the initial 10 percent fee increase, practices have to be certified as patient-centered medical homes (PCMHs). They can receive an additional 10 percent in per-member, per-month fees, 5 percent for reaching Healthcare Effectiveness Data and Information Set (HEDIS) measurements and 5 percent for providing team-based care.

Tom Simmer, M.D., senior vice president and chief medical officer at Blue Cross in Michigan, estimates that about 50 percent of physicians in the plan receive 20 percent to 30 percent bonus payments. Medical home practices in the plan recorded a 25 percent lower rate of hospitalizations for ambulatory-sensitive conditions. The program saved $155 million during its first three years, according to Blue Cross.