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Most HMOs pay some incentives

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Slightly more than half of health maintenance organizations used some form of pay-for-performance in their contracts with doctors and hospitals in 2005, according to a study financed by the Washington-based Agency for Healthcare Research and Quality.

Of the 52% of HMOs using pay-for-performance arrangements, 90% included these incentives in their physician contracts, while more than one-third applied them in their hospital contracts, according to the study, which appears in the Nov. 2 issue of the New England Journal of Medicine.

Pay-for-performance programs were most likely to be implemented by HMOs that use primary care physicians as gatekeepers to specialty care and capitation payment arrangements in which PCPs receive monthly payments based on the number of patients they see from a given health plan.

One-third of the physician-focused pay-for-performance programs used by HMOs were designed to reward only the top-rated physicians or physician groups, while nearly two-thirds offered rewards for attaining a pre-determined performance threshold. Bonus payments for physicians averaged 5% of total health plan payments.

Although 38% of HMOs said they used pay-for-performance programs in hospital contracts, use of the Leapfrog Group's measures as criteria for rewards was relatively low. Nearly three-quarters of the HMOs said they relied on other measures of quality in their hospital pay-for-performance programs.

Leapfrog was founded in 2000 by the Business Roundtable to spearhead initiatives leading to improvements in safety, quality and affordability of U.S. health care.

The findings are based on a survey by researchers at the Harvard School of Public Health and the Harvard Medical School in Boston of medical directors or directors of quality management at 242 HMOs in 41 U.S. markets with at least 100,000 enrollees. The markets in the sample represented 91% of the U.S. HMO enrollees and 78% of the U.S. metropolitan population.