INDIANAPOLIS—WellPoint Inc. says it will link 5% of its employees' annual bonuses to measurable improvements in patient care using a Member Health Index that monitors 20 clinical areas.

All 42,000 WellPoint employees will be eligible to receive the bonuses, payable each March, based on overall improvements in patient care received by the 34 million members of both WellPoint and Anthem Blue Cross & Blue Shield plans nationwide. The members include those enrolled in group, individual, Medicare, Medicaid, health maintenance organization, preferred provider organization, and high-deductible consumer-driven health plans.

The bonuses will be paid based on how well WellPoint's entire member population improves in four key areas: screening and prevention, care management, clinical outcomes and patient safety. If specific targets are met, the entire 5% will be paid to WellPoint employees as part of their annual bonus. If not, employees will not receive that portion of their bonuses, according to a spokesman for the Indianapolis-based health insurer.

To populate the Member Health Index that will be used to determine the bonus payments, WellPoint will tap claims data as well as the databases kept by Health Management Corp., its disease management and integrated care management subsidiary, and WellPoint NextRx, its pharmacy benefit manager.

Although other major health insurers have yet to unveil comparable initiatives, WellPoint executives said they doubt any of their industry peers have the market share needed to conduct such a widespread incentive/health improvement project.

"It speaks to the depth we have in our markets. Having 34 million members across this country, that means we actually have data that's reliable, valid and speaks to what we can do in a community," said Dr. Sam Nussbaum, WellPoint's executive vp and chief medical officer.

"This is hard to do," he added. "With all of our data, we wanted to make sure we had valid measures, nationally accepted standards. In fact, we've been testing this with a number of people and getting ideas and vetting it."

Although the response to WellPoint's Member Health Index and incentive program has been largely positive, some skeptics in the industry said the effort is more marketing than a performance measure.

"I view this as more of a marketing strategy for WellPoint than a real health initiative," said Ray Brusca, vp-benefits at Black & Decker Corp. in Towson, Md.

"Since they are in the business of health, it makes sense to tie employee bonuses to that issue," which would be "no different than most bonus programs that tie bonus payments to business objectives," Mr. Brusca said.

However, "with only 5% of the bonus amount tied to the health of the members, it's a token marketing move for public consumption and not a strong bonus factor. If member health were really a major performance factor, then a much greater percentage should be tied to it," Mr. Brusca said.

Cindy Lee, manager of benefits and retirement operations for King County, Wash., questioned whether the WellPoint incentive program would mesh with community-based quality improvement initiatives already under way.

"This initiative sounds commendable, but it may play havoc with regional efforts, like the Puget Sound Health Alliance, to create health care quality and cost measures that are used by all providers, purchasers and plans in a region," Ms. Lee said.

Dr. A. Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan in Ann Arbor, agreed.

"Given that there are multiple examples where various types of quality improvement and cost containment mechanisms conflict, we think it is imperative that all aspects of health care financing and reimbursement look hard at their incentives and make sure they are appropriately aligned to increase the use of those services that improve health and discourage the use of services of unproven or little clinical value," Dr. Fendrick said.

Advanced approach

But Helen Darling, president of the National Business Group on Health, said the initiative is very much aligned with corporate quality improvement initiatives.

"Leading-edge employers are devoting lots of money, energy and 'mindshare' to health improvement of their employees. So if you're sitting in a benefit department trying to decide where you want to be strategic, you want others--your vendors, your suppliers, your health plan--to be paying attention to health improvement. You want them to pay claims efficiently, but you also want them to care about improving health," Ms. Darling said.

"One of the metrics that I had tried to impress upon GE and other employers to hold plans accountable was the number of plan members that were going to safe hospitals and high-quality physicians. What WellPoint is suggesting is even broader than what I had imagined, if pushed to its logical conclusion," said Francois de Brantes, national coordinator of Bridges to Excellence and the former program leader for corporate health initiatives at General Electric Corp. in Fairfield, Conn.

Moreover, WellPoint's incentive program could remove barriers that have been impeding efforts to improve care, he added.

"One of the challenges that any plan faces when creating change is the initial inertia of departmental silos. By having every employee focused on the health of covered plan members, it should give an incentive to all to find ways to cooperate, be innovative and find common solutions," Mr. de Brantes said.

Paul Ginsberg, director of the Center for Studying Health System Change in Washington, said it is a natural progression in the evolution of the health insurance industry for WellPoint to move in this direction.

"Here, WellPoint is saying, 'we have the ability to influence care that's going to lead to better outcomes,"' Mr. Ginsberg said.

Other large, national health insurers are likely to compete by introducing comparable initiatives, he said.

"I wouldn't assume from this that (WellPoint's) capabilities are more advanced than UnitedHealth (Group) or some of their competitor Blue Cross (& Blue Shield Assn.) plans. This is reflective of where the industry is going," he said.

"It's an interesting way of taking the notion of 'pay-for-performance' beyond the physician office setting," said a spokesman for the National Committee for Quality Assurance in Washington, whose Health Plan Employer Data and Information Set measures serve as the benchmark used by numerous quality improvement initiatives.

"It's a fairly novel approach," the NCQA spokesman said. "But, as usual, the devil is in the details."