To our knowledge, this is the first study to examine the use of financial incentives for performance on quality measures specifically among cancer care providers. We found that the use of incentives for quality among surgeons and medical and radiation oncologists caring for patients with breast cancer in Los Angeles County was modest and was primarily associated with staff- or group-model HMO practice settings.
We found that study physicians in staff- or group-model HMO settings were much more likely to report being subject to pay for performance. However, we note that few staff- or group-model HMOs exist outside of California, the Pacific Northwest, and Minnesota. In light of the small number of such settings in our sample and elsewhere, we performed analyses that excluded physicians in staff- or group-model HMO settings to identify predictors of pay-for-performance use in other settings. Among physicians in other settings, important predictors were partial physician ownership interest, large practice size, and physician receipt of capitated reimbursements.
These findings could be accounted for by group-model HMOs responding to concerns about quality with strong quality initiatives. Staff- or group-model HMOs are often well equipped to administer pay-for-performance programs with their strong link between financing and care delivery, information technology capabilities for data capture and attribution of care to a specific physician, and potential to influence organizational culture. In contrast, the more prevalent network model faces challenges in delivering incentives, with weaker links among physicians, particularly specialists.
Our findings might also reflect that oncology specialists are less likely to contract directly with health plans as opposed to with physician organizations, which in turn may be less likely than health plans to implement pay-for-performance schemes directed at specialists with whom they contract. In our study, 59% of all physicians not in staff- or group-model HMOs and 70% of 133 physicians in single-specialty medical groups reported at least 1 contract with a medical group or independent practice association; it is unknown how many might also contract directly with health plans.
Differences were also found across levels of physician ownership interest in their practice. Respondents with partial ownership interest in their practice were more likely to report receipt of incentives for quality than full owners, despite controlling for practice setting type and size. We believe that this reflects differences across practice setting types in the source of the incentive program. In some settings, incentives for quality are administered by the medical group, whereas in other settings incentives come directly from the health plan to the physicians. Unfortunately, we did not have data regarding this level of complexity and were unable to tease out any such differences. We were also somewhat surprised to find no significant differences by specialty type, as many domains of structure of care under study in this physician cohort have varied across specialty type.21
Clearly, there has been great interest in paying for performance as a way to motivate improvements in the quality of care in the United States, and perhaps nowhere more so than in California. Although no 2 medical markets are alike, experiences in Southern California have been viewed as a bellwether and may offer insights for plans and providers in other markets. Managed care dominates the Southern California medical market, although enrollment is down slightly from the highs of the 1990s. The Southern California managed care market is dominated by a few large HMOs. Although the single-group–model HMO remains the largest managed care plan in the state, with a large effect on the market, most are network-model HMOs. Following substantial consolidation throughout the 1990s, medical groups and independent practice associations are now the most prominent form of physician organization in Los Angeles. Increasingly, physician organizations face demands from health plans aiming to link compensation to performance. Although only a small proportion of payments from health plans was tied to clinical performance in 2004, that proportion was expected to grow, particularly given the strong value-based purchasing environment and efforts of the Integrated Healthcare Association in California, as well as other initiatives around the country such as Bridges to Excellence and Rewarding Results.29
The Centers for Medicare & Medicaid Services are moving closer to implementation of incentives, but little is known about the prevalence of their use among specialists. Rosenthal30
documents that the percentage of enrollees in plans with various types of pay-for-performance systems targeting specialists increased substantially between 2003 and 2006, although systems targeting primary care providers have remained dominant. In 2007, only 11 of the Centers for Medicare & Medicaid Services Physician Quality Reporting Initiative quality measures targeted cancer care, with just 2 focusing on breast cancer.31
A good deal of medical care, particularly for chronic conditions among older persons, is and will continue to be delivered by specialists. Like primary care physicians, they should be accountable for the quality of care that they provide; they should also have opportunities to reap rewards when they are delivering good care. However, the modest use of incentive systems among specialists caring for patients with cancer outside of staff- or group-model HMO settings suggests that among the major challenges to be faced will be how to apply such incentive systems to specialists in smaller independent practices. An additional challenge will be the evaluation of systems that are implemented in different ways such as those in which incentives are delivered at the medical group level compared with the individual physician level. Furthermore, in conditions such as cancer in which a team of physicians may be treating the patient and certain patient needs are fulfilled by more than 1 specialty type, methods must be developed for the appropriate attribution of “credit” and responsibility when guideline-concordant care is and is not delivered. In addition, most providers have contracts with multiple plans or physician organizations and face differing arrangements with each, negatively affecting the likelihood that incentives would significantly influence physician behavior.
This study is subject to several limitations. The study is limited in geographic scope. Results come from Los Angeles County physicians named as care providers to a population-based cohort of patients with breast cancer and reflect practices of a small number of plans and physician organizations in a managed care–penetrated market facing strong purchaser interest in quality improvement initiatives. Experiences in Southern California have been viewed as a bellwether and may offer insights for plans and providers in other markets, particularly in markets with high managed care penetration such as in the Pacific Northwest, Northeast, mid-Atlantic, and Midwest (eg, Washington, Oregon, Massachusetts, New York, Pennsylvania, Maryland, Minnesota, Michigan). In addition, narrow geographic focus provides a control for unmeasured market characteristics.
We did not have data allowing us to separate out the specific system level associated with the administration of incentives for quality. Therefore, we could not discern which incentives for quality were administered by health plans versus by the physician’s medical group. However, we measured incentives directly affecting the pay of respondent physicians based on the results of their performance compared with incentives that may be received by the medical group and never dispersed to individual physicians. Nonresponse could have biased results if the reason for nonresponse was differentially associated with the use of financial incentives for quality. However, at 76%, our response rate was high relative to most physician surveys, and analyses were weighted for nonresponse based on specialty type, physician sex, practice volume, and sharing an office with another study participant. In addition, this analysis did not assess whether financial incentives for quality are associated with quality of care and patient outcomes in the context of cancer care.