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Pay-for-performance -- the practice of rewarding providers with financial and non-financial incentives for high quality, cost efficient care -- has emerged in Medicaid at the state and health plan levels as health care purchasers grapple with pressures to improve quality and reduce cost.    

Inland Empire Health Plan (IEHP), a nonprofit HMO in California's Riverside and San Bernardino counties, is a veteran among Medicaid health plans in its use of provider incentives. The plan first implemented an incentive for childhood immunizations in 1997, and the plan's incentive program has since evolved, now focusing on numerous clinical and quality improvement activities.  

IEHP's program focuses largely on preventive services such as immunizations, well-child visits, and Pap smears that may represent missed opportunities for providers who are more focused on dealing with acute or emergent needs of their members.  

"One of our initial goals was to significantly decrease "missed opportunities" at our PCP offices, e.g. those interim mild illness visits that could incorporate immunizations or even a well-child visit, but the preventive service does not happen," said Bradley Gilbert, MD, chief medical officer, Inland Empire Health Plan. "In addition, we wanted to improve the quantity and quality of our administrative data in these areas, as well as increase physician reimbursement.  We have accomplished all three goals by using a fee-for-service model directly related to the service provided.  In our overall capitated model, our P4P funds have motivated our physicians to provide and report these services for our members."  

Launched in September 1997, the goal of the IEHP Immunization Program was to increase immunizations for members age 0 to 2 by reimbursing physicians for timely vaccines. In April 2000, IEHP's Physician Incentive Program was launched, and additional components were added: well-child visits, an adult physical, perinatal services, and a health education behavioral assessment. Physicians were reimbursed $50 for each well-child visit done in accordance with the IEHP Well-Child Visit schedule for members age 0-18 years. Exams completed during the first 120 days of enrollment earned an additional $50 bonus.  

"For perinatal services, we took a different approach," said Dr. Gilbert. "We were trying to motivate our OBGYNs to get patients into the office early in their pregnancy. So we stratified the payments by trimester (higher for first, etc.) for that first visit on top of the regular fee-for-service for the medical care component of the perinatal care."  

In the next three years, the behavioral health component was dropped, and Pap tests, Chlamydia screenings, and diabetes exams were added.  

In 2004, IEHP retooled the program to be more HEDIS-focused. "We implemented two bonuses that have had major positive impact," said Dr. Gilbert. "One is the completion of six well-child visits by 15 months, and the other is the submission of a complete immunization record in California, called a yellow card, which has turned out to be a great source of data. That has become a major motivator for our physicians to get members caught up."  

For IEHP and other health plans, as incentive programs that initially focus on access and prevention become more sophisticated, rewards for improvements in chronic care and specific clinical outcomes can be added. For example, in September 2005, IEHP added an incentive program focused on appropriate asthma care. It reimburses providers for clinical processes, such as the completion of an asthma progress note based on national guidelines for asthma care, at every visit. Physicians can earn up to $100 per year per member with asthma.              

IEHP's pay-for-performance efforts have helped increase the timeliness of preventive health services and improve HEDIS results. IEHP is now in the 90th percentile nationwide for well-child visits in the first 15 months of life and for Medicaid plans for timeliness of prenatal care and postpartum care. The plan also has the highest rate in California for adolescent well-care visits, and is in the 90th percentile nationally for immunizations for Medicaid plans.     

IEHP credits much of the success of its P4P program to better data collection and a focus on HEDIS results. "This is now a $12 million program directly paid to our physicians," said Dr. Gilbert. "In addition, this year we implemented a P4P program for our IPAs, to further improve our HEDIS scores. As part of the IPA P4P program, we gave them physician-specific, web-based data so they can give further information to their physicians regarding members who are missing services. So we're looking forward to seeing if we can get yet more incremental increases to our HEDIS measures after that."