title: Michigan's fee-for-value physician incentive program reduces spending and improves quality in primary care.
abstract: As policy makers and others seek to reduce health care cost growth while improving health care quality, one approach gaining momentum is fee-for-value reimbursement. This payment strategy maintains the traditional fee-for-service arrangement but includes quality and spending incentives. We examined Blue Cross Blue Shield of Michigan's Physician Group Incentive Program, which uses a fee-for-value approach focused on primary care physicians. We analyzed the program's impact on quality and spending from 2008 to 2011 for over three million beneficiaries in over 11,000 physician practices. Participation in the incentive program was associated with approximately 1.1 percent lower total spending for adults (5.1 percent lower for children) and the same or improved performance on eleven of fourteen quality measures over time. Our findings contribute to the growing body of evidence about the potential effectiveness of models that align payment with cost and quality performance, and they demonstrate that it is possible to transform reimbursement within a fee-for-service framework to encourage and incentivize physicians to provide high-quality care, while also reducing costs.
authors.affiliation: Christy Harris Lemak (lemak@uab.edu) is a professor in and chair of the Department of Health Services Administration at the University of Alabama at Birmingham. At the time this research was conducted, she was an associate professor in the Department of Health Management and Policy, University of Michigan, in Ann Arbor.
authors.forename: Christy Harris
authors.initials: CH
authors.lastname: Lemak
authors.affiliation: Tammie A. Nahra is an assistant research scientist in the Department of Health Management and Policy, University of Michigan.
authors.forename: Tammie A
authors.initials: TA
authors.lastname: Nahra
authors.affiliation: Genna R. Cohen is a doctoral candidate in the Department of Health Management and Policy, University of Michigan.
authors.forename: Genna R
authors.initials: GR
authors.lastname: Cohen
authors.affiliation: Natalie D. Erb is a program manager at the Health Research and Educational Trust in Chicago, Illinois.
authors.forename: Natalie D
authors.initials: ND
authors.lastname: Erb
authors.affiliation: Michael L. Paustian is a health care manager in the Department of Clinical Epidemiology and Biostatistics at Blue Cross Blue Shield of Michigan in Ann Arbor.
authors.forename: Michael L
authors.initials: ML
authors.lastname: Paustian
authors.affiliation: David Share is senior vice president, value partnerships, at Blue Cross Blue Shield of Michigan in Detroit.
authors.forename: David
authors.initials: D
authors.lastname: Share
authors.affiliation: Richard A. Hirth is a professor in the Department of Health Management and Policy, University of Michigan.
authors.forename: Richard A
authors.initials: RA
authors.lastname: Hirth
mesh_terms: D000328:Adult; D054598:Blue Cross Blue Shield Insurance Plans / Q000191:economics; D002648:Child; D018588:Fee-for-Service Plans / Q000191:economics*; D006801:Humans; D008824:Michigan; D058007:Physicians, Primary Care / Q000191:economics / Q000592:standards; D011320:Primary Health Care / Q000191:economics* / Q000458:organization & administration; D011787:Quality of Health Care; D012052:Reimbursement, Incentive / Q000191:economics*
keywords: Insurance; Organization and Delivery of Care; Physician Payment; Primary Care; Quality Of Care