Press Release

Independence Blue Cross Invests $47 Million in New Physician Payment Model

Philadelphia, PA - April 30, 2010 - As part of its ongoing commitment to help improve the quality and affordability of health care in southeastern Pennsylvania, Independence Blue Cross (IBC) is changing the way it pays primary care physicians to encourage safer, higher quality, and more cost-effective care. Because of the importance of primary care in keeping members well, IBC is investing an additional $47 million to supplement primary care physicians' compensation.

More than $33 million of this added investment will fund an enhanced incentive program where physicians may earn additional compensation for providing better care, not more care. The new incentive program offers primary care physicians the opportunity to double their incentive earnings over last year's program by providing excellent care and service to IBC's commercial and Medicare Advantage HMO and Point-of Service members.

Well-regarded national studies have documented that a patient who is directly connected to a primary care physician is more likely to get preventive screenings and other appropriate care that helps avoid illness and stay well.

While improving primary care physicians' reimbursement, IBC carefully balanced its responsibility to keep customers' premiums affordable with its commitment to provide equitable compensation for its network physicians. The changes in IBC's reimbursement are designed to help attract and retain high performing primary care physicians by rewarding them for the vital role they play in delivering quality care to IBC's members. At the same time, IBC is modifying its reimbursement for costlier, episodic, specialty care services, which can often be avoided with regular, effective preventive care.

"IBC is a strong advocate for changing the health care system to enhance the affordability and quality of health care," said Joseph A. Frick, president and chief executive officer at Independence Blue Cross. "Real and sustainable health care reform includes collaborating with our physician and hospital partners by enhancing incentives for providing safer, higher quality, and more cost-effective care - rather than just more care. That's what these changes are all about and they demonstrate our commitment to help people stay well, and encourage better coordination of care when our members become ill."

About 1,800 family and general practitioners, internal medicine practitioners, and pediatricians participate in IBC's health care provider network in southeastern Pennsylvania. Beginning                   July 1, IBC's compensation for primary care physicians will include three components:

• Base reimbursement. First, IBC will increase the amount it pays primary care physicians by an average of 10% for services provided by primary care physicians participating in its network. This change marks the largest increase in a series of such actions IBC has taken over the last five years to improve primary care physicians' compensation.
  
  
• Incentives for improving clinical quality outcomes while improving patients' education and access to care. Second, the new incentive payment model, known as Quality Incentive Payment System or QIPS, will reward primary care physicians who improve the quality of care compared to nationally accepted standards of quality care like proper blood sugar testing, cholesterol screening, and eye exams when treating diabetic patients, and other measures such as breast, cervical and colorectal cancer screenings, childhood and adolescent immunizations, and the management of asthma and cardiovascular conditions. The new incentive program rewards physicians' performance on process measures and quality outcomes compared to peers in the same specialty such as family or general practice, internal medicine, or pediatrics. The highest performing physicians have the greatest incentive earning potential in addition to their base reimbursement.
  
  To further improve a patient's compliance and a doctor's use of these key quality of care metrics, IBC is offering meaningful incentives to primary care practices who meet some or all of the core requirements of the nationally recognized Patient-Centered Medical Home model. The "medical home" seeks to revolutionize the management of chronic disease through a more personalized, team approach to primary care medicine. IBC is one of the first health plans in the country to integrate this approach into its physician payment model. This program has been shown to improve access and coordination of health care and greater involvement of patients in their health care decisions while reducing and preventing, ineffective, and often more expensive treatments (See "Results of Pennsylvania's Medical Home pilot" for more details. In fact, a recent study in the New England Journal of Medicine supports the changes in this new model of care, which are needed for primary care physicians to more effectively improve the health of patients and contain costs.
  
  Separately, a national Medicare pilot program to test this new patient-centered model of care will be funded by the health care reform legislation signed into law on March 23. In this federal pilot project, which will begin in 2011, primary care physicians, specialists, and hospitals will be able to earn bonus payments by working together to provide better care at lower costs, in what is known as accountable care.
  
  
• Incentives for managing medical costs. The third component of compensation, included in QIPS, will reward doctors who effectively manage physician and outpatient services by coordinating the integration of their patients' care across the continuum of health care services. Providing incentives to improve care coordination encourages physicians to take the time needed not only to discuss the risks and benefits of certain procedures or treatment, but also to help patients understand the value of the treatment - for example, understanding the benefits of non-invasive, conventional treatment versus a diagnostic or invasive procedure. Such discussions between doctors and patients help to improve health care affordability.

"While the country prepares for changes to our health care delivery system, it is encouraging to know that our region's largest insurer, IBC, is helping physicians by making additional funds available through its new payment model to support the tools and infrastructure needed to provide its members with the highest quality, and most affordable care," said Dr. Tom Lyon of Mt. Airy Family Medical Practice.

"We understand the challenges facing the U.S. health care system, particularly among primary care physicians, and we are proud to offer an innovative primary care physician payment program as a major part of the solution to help strengthen the role these doctors serve in today's changing health care climate," said IBC's Douglas L. Chaet, senior vice president, Contracting and Provider Networks. "We've long-supported collaborations with physicians, hospitals, and other health care providers to improve cost and quality for patients and look forward to their continued participation in quality initiatives like this."

About IBC

Independence Blue Cross is a leading health insurer in southeastern Pennsylvania. Nationwide, Independence Blue Cross and its affiliates provide coverage to nearly 3.3 million people. For more than 70 years, Independence Blue Cross has offered high-quality health care coverage tailored to meet the changing needs of members, employers, and health care professionals. Independence Blue Cross's HMO and PPO health care plans have consistently received the highest ratings from the National Committee for Quality Assurance.

Independence Blue Cross is an independent licensee of the Blue Cross and Blue Shield Association.

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