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Commercial HMOs Embrace Pay-for-Performance Programs

Study finds that more than half of HMOs use pay-for-performance in their provider contracts

WEDNESDAY, Nov. 1 (HealthDay News) -- Pay-for-performance programs are now used by a majority of commercial health maintenance organizations, according to a special report published in the Nov. 2 issue of the New England Journal of Medicine.

Meredith B. Rosenthal, Ph.D., of Harvard Medical School in Boston, and colleagues surveyed 252 HMOs in 41 metropolitan areas.

The researchers found that 126 HMOs used pay-for-performance in their provider contracts and that nearly 90 percent of them had programs for physicians and 38 percent had programs for hospitals. These HMOs accounted for more than 80 percent of the patients enrolled by the surveyed HMOs. The researchers also found that use of pay-for-performance was statistically associated with geographic region, use of capitation to pay primary care providers, use of primary care providers as gatekeepers, and whether the plans received bonuses or were penalized for performance.

"Patterns of diffusion of pay-for-performance are largely consistent with the notion that health plans that are better situated to benefit from these programs are more likely to incorporate them into their payment systems than HMOs that are less well-situated to do so," the authors conclude. "As the Centers for Medicare and Medicaid Services begins to design a pay-for-performance program for Medicare, information on commercial models may prove critical."

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