Survey of Healthcare Payers Reveals Major Setback with Pay for Performance (P4P) Programs

FRAMINGHAM, MA – MAY 2, 2007 – In a recent survey conducted by Health Industry Insights, an IDC company, results reveal a major disconnect between healthcare payers' pay for performance (P4P) program objectives and provider incentives and technology investment. According to the findings, the majority of survey respondents (70%), who represent 57 U.S. health plans with P4P programs in production or pilot, say they have a P4P program that actively promotes physician technology adoption to improve healthcare quality, safety and outcomes. However, despite respondents' assertions, findings show only one in three (33%) respondents actually implement physician technology adoption as a P4P incentive. Additionally, less than 37% report active investment or sponsorship of these initiatives.

"Payers' investment and focus on physician technology adoption, in such areas as electronic medical records, e-prescribing and electronic access to clinical guidelines, is at the heart of overall healthcare performance improvement," says Janice W. Young, program director of Payer IT Strategies at research and advisory firm, Health Industry Insights. "We're seeing inconsistent messages, promotions, investment and strategies regarding importance of physician technology adoption, and, if not addressed, this looming provider disconnect will surely limit the effectiveness of U.S. P4P initiatives."

Does Your Health Plan have A Consistent P4P Strategy?

According to survey findings, thirty-five percent (35%) of health plans implement P4P programs across all of their product lines, including products like health maintenance organizations (HMOs), Medicare, Medicaid, preferred provider organizations (PPOs), consumer-defined health plans (CDHPs), etc.

Of these single product P4P programs, HMOs take the lead with almost half (40%) of respondents reporting a P4P program in place. More notably, fewer than 30% of respondents report executing P4P for Medicare programs, and less than 20% for Medicaid programs. Respondents' answers indicate PPOs (17.5%), self-insured accounts (9%) and CDHPs (6%) have significantly fewer P4P programs in place.

Adds Young, "Given the 2006 federal and state mandates, we expect a greater growth and focus in 2007 on Medicare and Medicaid programs. But, the strongest strategy for a health plan is to execute P4P programs across all products to eliminate program inconsistencies that confuse both physicians and consumers."

Payers Unveil P4P Budget Commitments

The majority of survey respondents (60%) also indicate having a dedicated budget for a P4P program and project an increase in total health plan budgets devoted to P4P from 2006 to 2007.

"Healthcare payers' budgetary commitments to P4P programs clearly signals a strong movement toward improving cost and quality of care for their members," points out Young. "This is a step in the right direction, but payers now need to focus on establishing a 360-degree P4P program strategy that aligns incentives for outcomes and wellness among providers, consumers and employers."

Additionally, when asked about the criteria and incentives of their P4P programs, health plans also indicate a strong commitment to improving healthcare performance and patient satisfaction. The majority (83%) of respondents report the criteria most-often used for assessment criteria to be improving clinical outcomes, followed by the use of clinical guidelines (60%) and patient satisfaction (50%). Less than half of respondents (44%) indicate enticing provider participation and compliance with disease management programs as important criteria, with provider IT adoption (33%) and administrative efficiency (33%) coming in fourth and fifth respectively.

These survey findings, and more, can be found in Young's recent report series: "U.S. Healthcare Payer Pay for Performance Survey: Current State and Emerging Models" (Doc # HI205568), "Healthcare Payer Pay for Performance: Technology Investment Strategies, 2007" (Doc # HI205867), and "Pay for Performance and Provider Technology Investment: The Looming Disconnect" (Doc # HI205976). All three reports are available on http://www.healthindustry-insights.com .

Survey Methodology

Health Industry Insights' healthcare payer pay for performance survey was conducted in November and December of 2006 among 57 senior medical executives from a representative sample of health plans across the United States. Respondents, all of whom have a P4P initiative in production or pilot, were interviewed via a web survey.

NOTE TO EDITOR: Any data reported from this survey must be sourced as origination from "Health Industry Insights, an IDC company."

About Health Industry Insights

Health Industry Insights, an IDC company, provides health and life sciences industry executives, and the suppliers who serve them, with market research and advisory services. The company's integrated coverage spans the entire health industry value chain and closely follows the payer, provider and life sciences markets with special emphasis on developing and employing strategies that leverage IT investments to maximize organizational performance. Staffed by expert analysts and consultants with extensive industry experience, Health Industry Insights delivers a portfolio of offerings relevant to both IT and business needs. IDC is a subsidiary of IDG, the world's leading technology media, research and events company. For more information, visit http://www.healthindustry-insights.com .

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