Quality-based Payment for
Medical Groups and Individual
Physicians
Sara Fernandes-Taylor
University of California, Berkeley
Academy Health
2009 Annual Research Meeting
1
Manuscript and Survey
Authors:
 James C. Robinson, Stephen M. Shortell, Diane R.
Rittenhouse, Sara Fernandes-Taylor, Robin R. Gillies, and
Lawrence P. Casalino
 Forthcoming in Inquiry
National Study of Physician Organizations II funders:
 Robert Wood Johnson Foundation
 The Commonwealth Fund
 California Healthcare Foundation
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Research questions
1.
Do medical groups that face performancebased incentives create corresponding
incentives for their member physicians?
2.
Do medical groups that participate in
formal quality improvement initiatives
create performance-based incentives for
member physicians?
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Background

Public and private insurers are
implementing quality-based physician
incentive programs (Christianson, Leatherman, &
Sutherland, 2007; Robinson & Megerlin, 2007)

Debate exists regarding whether bonuses
should be paid to individual physicians or
larger physician organizations (Hofer et al., 1999;
Conrad et al., 2002)
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Sample

Comprehensive list of all U.S. medical
groups with 20 or more physicians
 35 minute phone interview with Medical
Director or CEO from 3/2006 to 3/2007
 58.7% adjusted response rate; N=339
– Primary care only: 96
– Specialty care only: 26
– Primary & specialty care: 217
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Characteristics of Medical Groups
Mean (SD) or %
Participate in Quality Initiative
59.0%
Owned by Hospital or HMO
Commercial Insurance Revenue
32.2%
51.5% (20.9)
Medicare Revenue
Medicaid Revenue
Patient Self-Pay Revenue
Number of MDs in group
29.3% (16.2)
12.6% (16.7)
6.6% (8.9)
188.2 (512.1)
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Characteristics of Medical Groups

52% receive revenue from health plans
based on quality or patient satisfaction
 Payment based on quality or patient
satisfaction:
– 27% of groups pay primary care physicians
– 19% of groups pay specialists

Size of individual bonuses is modest:
– 7.5% of earnings for primary care physicians
– 6.1% of earnings for specialists
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Results of Multivariable
Regressions (Question 1)

Medical groups facing performance-based
incentives are more likely to create
corresponding incentives for physicians:
– primary care physicians (OR=4.5; p<.001)
– specialists (OR=2.5; p=.07)
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Multivariable Regressions
(Question 1 cont.)

Medical groups facing performance-based
incentives base a greater percentage of
individual physician payment on
quality/patient satisfaction:
– primary care physicians (2.3%; p<.01)
– specialists (1.3%; p<.05)
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Multivariable Regressions (cont.)
Groups facing capitation:
 pay member physicians more on salary:
– Primary care physicians: 0.55%; p<.001
– Specialists: 0.29%; p<.05

pay member physicians less on productivity:
– Primary care physicians: -0.63%; p<.001
– Specialists: -0.32%; p<.05
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Multivariable Regressions
(Question 2)

No significant association was observed
between participation in formal quality
improvement and performance-based
incentives for member physicians
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Summary

Medical groups that face performancebased incentives create corresponding
incentives for their member physicians
 Medical groups’ participation in formal
quality improvement initiatives is not
associated with the creation of performancebased incentives for member physicians
 Limitations
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Conclusions

Medical groups value aligning group
incentives with those of individual physicians
 However, the prevalence of insurer bonuses to
groups exceeds the prevalence of group
bonuses to physicians
– Importance of non-financial performance
incentives within groups

Supports insurers’ adoption of pay-for
performance initiatives
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