WMPN PFP GROUP
STRUCTURE CHANGES

Effective August 1, 2007, WMPN has reached agreement with Priority Health on a 2007 contract on behalf of your practice. To date, Priority Health has implemented two separate increases to the capitation schedule (January 1, April 1) and fee schedule changes which increased total payments under E&M codes (April 1). The major remaining issue for 2007 has been the Pay-For-Performance (PFP) group structure under which PFP bonuses will be determined at settlement (i.e., seven separate versus one combined risk group).

WMPN leadership aggressively negotiated the terms and conditions under which we would agree to change the PFP group structure for the 2007 contract year. Based upon agreement to these conditions by Priority Health, WMPN primary care physicians will be evaluated as a single PFP group for 2007, with the expectation that in 2008 Priority Health will resolve the underlying issues which made multiple risk groups beneficial to our members.

Several key outcomes of this agreement include:

    * Priority Health reports will show WMPN physicians as one risk group starting in September; WMPN will continue providing utilization reports to our physicians on a monthly basis that will allow you to evaluate year-to-date performance (individual, practice, specialty, etc.).
    * At settlement, the total PFP bonus dollars available for distribution to WMPN primary care physicians will be no less than - and could exceed - the funding available under the previous risk group structure.
    * It is now within the physicians' control to determine how performance is evaluated and bonus dollars shared. The WMPN Board will be evaluating alternatives that will better align bonus payments with actual performance, with the goal of ensuring that better performing physicians earn greater rewards with WMPN than with any other organization contracting with Priority Health.
    * WMPN will be working more closely with Spectrum Health on utilization management initiatives that will benefit both organizations.
    * WMPN payments from Priority Health will be increased to be in-line with other PHOs in the market.

Finally, please remember that regardless of the PFP group structure, total PFP surplus payments network-wide likely will be lower than in prior years, solely due to the highly aggressive targets chosen by Priority Health in 2007. WMPN is continuing to work with and support practices in their efforts to maximize performance and rewards under both the PFP and PIP incentive programs.

We are confident that no other PHO has any contractual advantage over WMPN, and total return to our members will be at least as good under our new PFP group structure as it would be with any other PHO. We would be happy to explain in more detail if you wish.