Six Health Plans to Launch Quality Initiative
Six health plans that operate in California are expected to announce tomorrow a joint initiative to reward doctors and hospitals for "providing quality health care and for avoiding medical errors," the Los Angeles Times reports. Under the agreement, "billed as the first of its kind in the nation," Aetna, Blue Cross of California, Blue Shield of California, Cigna, Health Net and PacifiCare will employ a "common set of standards" for measuring performance by doctors and hospitals and will reward providers with bonuses of at least 5% for meeting these standards. The introduction of the initiative -- which the Times calls a "major step in an extremely competitive industry" -- is the latest example of employers and insurers emphasizing quality over costs, following an announcement last July by Blue Cross of California that it would begin rewarding doctors in its HMOs "for patient satisfaction rather than cost savings." The Times reports that managed care's shifting emphasis from cost control to quality is working in tandem with a movement to transfer more costs to employees and to give them greater control over their health care by providing them with information to make more "cost-efficient decisions." For instance, later this month, New York-based employees of IBM, Xerox, PepsiCo and Verizon will be able to access a Web site that ranks local hospitals based on quality and performance measures (White, Los Angeles Times, 1/14). Like the new California initiative, the companies will provide bonuses to hospitals that meet performance standards. "We think that 20% to 30% of health care costs can be reduced by minimizing mistakes and doing the procedure right the first time," Bruce Taylor, director of benefits planning for Verizon, said.
With double-digit inflation in health costs now a reality, health care analysts believe that the trend toward passing more costs and responsibilities on to employees is likely to follow, at least over the next few years. But observers are divided over whether this change will benefit consumers in the long run. Detractors say that employers and insurers are "abdicat[ing]" responsibility by transferring higher costs without creating increased efficiency. "It's an attempt to escape accountability by the HMO industry's inability to contain costs," Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said. But Henry Aaron, a senior fellow at the Brookings Institution, said, "There is an active movement among employers to find ways to provide consumers with better information on which providers do the best job and to use financial carrots to encourage consumers to select them. In the long run, it should cost everyone less money and provide better-quality care." Still, Aaron says that health care information for consumers must be enhanced before a system based on the evaluation of providers can succeed. According to Gregger Vigen, a senior consultant at consulting firm William M. Mercer, the current paucity of data makes the New York companies' efforts stand out even more. "Just getting up a Web site with this kind of information represents a big step forward," he said (Los Angeles Times, 1/14).