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Univera Healthcare and its parent company paid out more than $26 million in performance bonuses last year to 54 upstate New York hospitals – 19 in Western New York – to reward them for reduced medical costs by improving the quality of care, the insurer said Wednesday.

The No. 3 health insurer in Western New York, which is part of Rochester-based Excellus BlueCross Blue Shield, awarded the payments as part of its Hospital Performance Incentive Program. The payments are on top of the reimbursements the insurer already pays to the hospitals to cover the actual costs of medical care for its members under its provider contracts.

Specifically, Univera paid $2.2 million to Kaleida Health’s five hospitals and Catholic Health System’s three hospitals in Buffalo and the suburbs, Erie County Medical Center, Roswell Park Cancer Institute, Lake Erie Regional Health System of New York’s two hospitals in Irving and Dunkirk, Chautauqua Integrated Delivery System, Eastern Niagara Health System’s two hospitals in Lockport and Newfane, Mount St. Mary’s Hospital in Lewiston, Niagara Falls Memorial Medical Center, United Memorial Medical Center in Batavia and Women’s Christian Association (WCA) Hospital in Jamestown.

Hospitals and other providers have long complained that reimbursements are too low to cover their costs. That’s especially true of Medicare and Medicaid, which often pay even less, forcing the providers to rely on private insurance or uninsured patients who pay the full cost to make up the difference.

So the bonus payments become an attractive supplement to bolster the providers’ bottom line. Over the past nine years, the Excellus and Univera program has paid out more than $145 million in quality incentives, including $24.6 million in Western New York. And that’s also seen as good preparation for the new business and operating models envisioned under federal health care reform.

Other insurance carriers also use incentives to improve medical care at hospitals and providers, but specifics vary.

HealthNow New York, the Buffalo-based parent of BlueCross BlueShield of Western New York, no longer pays out “lump sums” to hospitals, but rolls in quality payments to hospitals in addition to regular reimbursements, said spokeswoman Julie Snyder.

Williamsville-based Independent Health Association has given out incentives of $2.5 million to $3.5 million a year. But “we’ve been migrating away from that” because they’ve become outdated, said Dr. Thomas Foels, chief medical officer.

Foels said that as quality improved and benchmark scores in specific areas reached high levels, continuing to focus on those measurements became less useful. Also, the focus by Medicare and Medicaid on the same areas made it redundant for the insurer to devote resources rather than redirecting efforts elsewhere.

Instead, Independent Health is moving toward a risk-sharing model in which the hospitals, providers and even employers can share in extra health care savings at year-end. That effort is taking particular aim at reducing unnecessary hospital admissions and readmissions, by addressing problems earlier and in lower-cost ways outside of hospitals and by better caring for patients so they don’t have to return.

“That’s where we’re headed,” Foels said. “We’re slowly retiring these incentive programs that are narrowly focused and getting into the next generation of tackling the more important problems, and we’ve now found an effective way to start doing that.”

Established in 2004, the Univera and Excellus program evaluates hospitals on over 300 performance measures, taking specific aim at four areas.

Those include better clinical results for heart attack care, heart failure and pneumonia care; better safety for patients through fewer infections in hospitals, better processes for coordinating medications and better surgical care; more use of a national survey tool to measure patient satisfaction; and more efficiency by using more generic drugs, reducing the length of hospital stays and preventing the need for readmissions.

email: jepstein@buffnews.com