California Pay for Performance Overview

The California P4P program is the largest non-governmental physician incentive program in the United States. Founded in 2001, it is managed by the Integrated Healthcare Association (IHA) on behalf of eight health plans representing 10 million insured persons. IHA is responsible for collecting data, deploying a common measure set, and reporting results for approximately 35,000 physicians in over 200 physician groups. This program represents the longest running U.S. example of data aggregation and standardized results reporting across diverse regions and multiple health plans. California consumers benefit from the availability of standardized performance results from a common measure set, which are available to the public through the State of California, Office of the Patient Advocate.

Since the program's inception, stakeholders have focused primarily on measuring and improving quality; however, during this time, the costs of care have continued to rise unabated. This has fueled concerns over the long-term sustainability of the HMO product in California, and focused the attention of P4P stakeholders on cost alongside quality.

In response, the P4P Program adopted improved value, which encompasses both cost and quality, as the ultimate goal of P4P between 2011 and 2015. The primary initiative for reaching this goal is Value Based Pay for Performance (Value Based P4P), which will hold physician organizations (PO) accountable for the costs of all care provided to their HMO members, as well as the quality of this care, and will help to align POs and health plans toward a more price-competitive HMO product.

Primary Objectives of Value Based P4P

The primary objectives of Value Based P4P are to reorder the priorities of the P4P Program to emphasize cost control and affordability; to continue to promote quality; to standardize health plan efficiency measures and payment methodologies; and to increase the amount of incentives available to POs using a shared savings model.