Home Health Care Delivery

PGIP Incentive Pool: Funding and Distribution

Since the inception of the Blue Cross Blue Shield of Michigan (BCBSM) Physician Group Incentive Program (PGIP), questions regarding the mechanism for funding the PGIP incentive pool have abounded. Part of the confusion can be attributed to the language used on BCBSM’s payment vouchers which gives the impression that payments are lowered due to a contribution to the PGIP incentive pool. What the voucher language fails to adequately explain is the fact that the approved “amount paid” is based on the established fee schedule (minus subscriber’s liability, if any), while the allowable amount includes the established fee schedule payment plus the amount intended to go to the PGIP incentive pool.

With the creation of the PGIP incentive pool, which was intended to be an additional professional funding stream separate from the traditional fee-based reimbursement, BCBSM determined that most professional fees would contain two components—the physician organization component and the physician component. The physician organization component funds the incentive pool and represents a set percentage of the allowed amount for most professional services. In 2011 this amount equals 4.2 percent. The physician organization component will increase to 4.7 percent effective July 1, 2012. The physician component represents the approved amount of reimbursement that BCBSM commits to individual physicians (established fee schedule amount).

BCBSM distributes incentive dollars from the PGIP incentive pool to the PGIP physician organizations twice annually. All funds from the PGIP incentive pool are distributed to the physician organizations; no funds are retained by BCBSM. As mentioned in a previous communication, physician organizations participating in PGIP initiatives receive incentive payments from the incentive pool based both on the participation and performance of the members within their respective organizations. Each physician organization determines how to best use the incentive dollars (such as infrastructure development, incentives to physician or other purposes). BCBSM expects each physician organization to use incentive dollars to further the overarching PGIP goals of improving health care quality and transforming health care value.

The “allowable amount” and approved “amount paid” columns on the provider vouchers are used by the Blues to track the separate amounts paid for PGIP and for individual physician reimbursement.  Therefore, it is important to understand what each of these key columns means:

When BCBSM pays the physician the “amount paid,” which is based on their established fee schedule, the additional physician organization component funds go to the PGIP incentive pool. According to BCBSM, the physician organization component dollars are not intended as fee schedule reimbursement and are not subtracted from the physician component for services.

Another way to ensure that the “amount paid” is consistent with BCBSM’s established fee schedule is to look up the procedure codes in web-DENIS. Listed with the procedure codes, where applicable, are two columns. The first column shows the fee with the incentive included and the second column shows the actual fee (identified as fee without incentive). The “amount paid” should be equal to the amount in the fee without incentive column (assuming no co-pay, deductible, or other insurance).

If you have questions, please feel free to contact either Stacey Hettiger (517-336-5766; shettiger@msms.org) or Stacie Saylor (517-336-5722; ssaylor@msms.org). BCBSM provider consultants can also assist in answering questions regarding PGIP and how to participate.