Rewarding providers for superior performance within the constraints of a finite budget is a challenge for Medicaid health plans and state Medicaid agencies. Eight California health plans participated in a collaborative project, Local Initiative Rewarding Results, to test the impact of financial and nonfinancial incentives on provider quality in preventive care services for children. Results of the project indicate that pay-for-performance programs can work in a Medicaid managed care setting, but only if health plans place enough dollars at stake and communicate effectively with providers.
The project goal was to improve the quality of and access to such services by increasing the rate of annual adolescent visits and preventive care visits for infants from birth to 15 months. The key areas of focus were well-baby visits, well-adolescent visits, and encounter data submissions from capitated providers. The plans also piloted member incentives to increase the rate of well visits for adolescents and babies.
The California HealthCare Foundation funded this project as part of the national Rewarding Results demonstration program, managed by The Leapfrog Group with national funding from the Robert Wood Johnson Foundation.
The Center for Health Care Strategies (CHCS) partnered with all eight of the Local Initiative managed care plans serving Medi-Cal and Healthy Families enrollees in California's nine two-plan model counties on an incentive program for their providers. The eight participating plans were the Alameda Alliance for Health, Contra Costa Health Plan, Health Plan of San Joaquin, Inland Empire Health Plan, Kern Family Health Care, LA Care Health Plan, San Francisco Health Plan, and Santa Clara Family Health Plan.
With technical assistance from CHCS, the eight health plans collaboratively developed and individually implemented incentive programs to reward pediatric providers for improving preventive care services for the nearly one million Californian children enrolled in these eight plans. The project began in the fall of 2002 and ran for three years.
The nine counties account for 3.5 million, or 60%, of the 5.7 million Medi-Cal (both managed care and FFS) and Healthy Families beneficiaries statewide. The eight plans (one plan serving two counties) cover about 60% of the 1.7 million Medi-Cal managed care enrollees and about 22% of the nearly 300,000 Healthy Families enrollees in their respective counties. Nearly 6,000 providers are affected by these programs.
Independent Project Evaluation
Findings from an independent evaluation of the demonstration project are available on the Mathematica Policy Research site listed under External Links. A Health Affairs Web Exclusive, "Making Pay-for-Performance Work in Medicaid," is available under Related CHCF Pages.