Can financial incentives improve equity in patient care?

In recent years, research has shown that offering financial incentives to physician groups can improve the quality of patient care and slow increases in medical costs.

Now, a research team at the UC Berkeley School of Public Health is examining whether paying doctors can improve a longstanding problem: the racial and ethnic disparities in delivery of health care.

In a study published in The Milbank Quarterly, Hector Rodriguez and other UC Berkeley investigators found that financial incentives can facilitate physician groups’ efforts to improve both quality of care and equitable care for all patients.

Rodriguez, the Kaiser Permanente Endowed Professor of Health Policy and Management and co-director of the Center for Health Management and Policy Research (CHAMP) at Berkeley Public Health, led the study team of CHAMP faculty, staff, and student researchers.

The researchers studied a program run by Blue Cross Blue Shield of Massachusetts (BCBSMA), a large commercial health insurer, which introduced financial incentives in 2022 in ambulatory (non-hospital) healthcare settings to improve equity of care by patient race and ethnicity. BCBSMA, the first national commercial health plan to design and launch equity incentives, implemented it as an expansion of an existing physician group incentive program that has been shown to improve quality of care and reduce the rate of cost growth.

Rodriguez’s team interviewed 44 stakeholders from independent physician groups, BCBSMA, along with external stakeholders.

The responses showed that deciding how to define and measure equity improvement was critical to getting physician group buy-in.

“The question for ambulatory care is, “Is it possible and effective to incentivize physician groups to improve equity of care by patient race and ethnicity?” Rodriguez said. “It’s uncharted territory. Previous to the equity incentives being introduced, physician groups were being incentivized for quality and managing the rate of cost growth. What BCBSMA essentially said is, ‘Given enduring racial and ethnic disparities in quality of care, we’re going to add equity to our incentive program to reduce these disparities.’”

The insurance company, the article notes, then worked with stakeholders to define what percentage of its incentive payments should be based on equity, compared to quality or cost. They landed at a bonus of 20% based on equity, and 80% based on quality and managing cost growth.

“There’s only upside risk in the program,” Rodriguez said. “If a physician group doesn’t improve equity of care by patient race and ethnicity, it doesn’t have to repay money to the insurer. That’s another enabling factor.”

For the first time, Rodriguez said, some of the physician groups are taking action to target specific racial and ethnic groups. For example, some physician groups are making follow up calls and conducting community-based outreach to Latinx and Black patients—who tend to have low rates of colorectal screenings—to get one.

The researchers are conducting a follow-up study, funded by the Commonwealth Fund, to examine the impact of equity initiatives on changes in equity of ambulatory care quality by patient race and ethnicity.

“It’s going to be quite informative,” Rodriguez said. “We’ll be able to answer the question, did using equity incentives actually reduce racial inequities in ambulatory care quality?”