Pay-for-performance (P4P) has been gaining momentum in the health care community since 2001 when the Institute of Medicine report Crossing the Quality Chasm: A New Health System for the 21st Century recommended incentive payments to improve health care quality. Broad scale initiatives (see Figure 5) as well as individual health plan initiatives to reward physicians for high quality care and improved patient outcomes have become increasingly common. Hospital P4P programs are emerging as well. The next evolution is likely to occur in pharmacy where an initiative to measure, monitor, and improve quality at the individual pharmacy level is under way. (See sidebar article Quality Wave Engulfs Pharmacy.)

Extending the Concept Across an Organization
WellPoint, Inc. has broken new ground in the pay-for-performance area by linking incentive pay for every employee to success in improving member health. While it’s increasingly common to compensate physicians for improving quality care and patient health, WellPoint is the first health management company to tie all employee compensation to such measures. The initiative extends to 40,000 associates in WellPoint’s family of companies, which includes pharmacy benefit manager WellPoint NextRx.

In 2007, WellPoint launched a comprehensive initiative to measure improvement in the health of its 35 million members using its newly developed Member Health Index (MHI). The MHI includes 40 quality of care measures in 20 clinical areas. Measures focus on prevention and screening, care management, clinical outcomes, and patient safety. Some are based on national standards and others were developed by WellPoint’s clinical experts. Four pharmacy measures included in the MHI monitor use of appropriate medications for asthma, hypertension, pediatric upper respiratory infection, and persistent therapies.

WellPoint combines the measures in a proprietary statistical model to determine the quality of health care its members receive year to year. As part of the initiative, a portion of all WellPoint employees’ incentive income is tied to MHI score improvements.

In the first year of the initiative, WellPoint improved 17 of the 20 clinical areas tracked, closing the gap between current and target performance by more than the five percent annual goal. As a result, WellPoint employees received their maximum incentive payout for meeting the goal for improvement in the MHI score.

For each of the measures that make up the MHI, WellPoint has experts that analyze the results and determine strategies to improve processes such as screening studies and outcomes of care. WellPoint has set its sights on an ambitious target performance goal for the coming year.