Pay for performance in healthcare gives financial incentives to clinicians for
better health outcomes. Clinical outcomes, such as longer survival, are
too difficult to measure, so pay for performance systems usually measure
process outcomes, such as measuring blood pressure, lowering blood pressure,
or counseling patients to stop smoking. Aaron E. Carroll, a professor of
pediatrics who writes a column for the New York Times, said after reviewing the
medical literature in 2014 that pay for performance in the U.S. and U.K. has
brought "disappointingly mixed results." Sometimes even large incentives don't
change the way doctors practice medicine. Sometimes incentives do change
practice, but even when they do, clinical outcomes don't improve. Critics
say that pay for performance is a technique borrowed from corporate
management, where the main outcome of concern is profit. In medical practice,
many important outcomes and processes, such as spending time with patients,
can't be quantified. Also known as "P4P" or “value-based
purchasing,” this payment model rewards physicians, hospitals, medical groups,
and other healthcare providers for meeting certain performance measures for
quality and efficiency. It penalizes caregivers for poor outcomes, medical
errors, or increased costs. Studies in several large healthcare
systems have shown modest improvements in specific outcomes, but these have
been short-lived, and reduce performance in outcomes that were not measured. They
also failed to save money. Professional societies have given
qualified approval to incentive programs, but express concern with the
validity of quality indicators, patient and physician autonomy and privacy, and
increased administrative burdens. Preliminary studies and trends
Pay for performance systems link compensation to measures of work quality
or goals. As of 2005, 75% of all U.S. companies connect at least part of an
employee's pay to measures of performance, and in healthcare, over 100
private and federal pilot programs are underway. Current methods of healthcare
payment may actually reward less-safe care, since some insurance companies
will not pay for new practices to reduce errors, while physicians and hospitals
can bill for additional services that are needed when patients are injured by
mistakes. However, early studies showed little gain in quality for the money
spent, as well as evidence suggesting unintended consequences, like the
avoidance of high-risk patients, when payment was linked to outcome
improvements. The 2006 Institute of Medicine report
Preventing Medication Errors recommended "incentives...so that profitability of
hospitals, clinics, pharmacies, insurance companies, and manufacturers
aligned with patient safety goals;...(to) strengthen the business
case for quality and safety." A second Institute of Medicine report Rewarding
Provider Performance: Aligning Incentives in Medicare stated "The
existing systems do not reflect the relative value of health care services
in important aspects of quality, such as clinical quality, patient-centeredness,
and efficiency...nor recognize or reward care coordination...(in) prevention and
the treatment of chronic conditions." The report recommends pay for
performance programs as an "immediate opportunity" to align incentives for
performance improvement. However, significant limitations exist in current
clinical information systems in use by hospitals and health care providers,
which are often not designed to collect data valid for quality assessment.
Commentary by physician organizations In the United States, most professional
medical societies have been nominally supportive of incentive programs to
increase the quality of health care. However, these organizations also
express concern over the choice and validity of measurements of improvement.
The American Medical Association has published principles for pay-for
performance programs, with emphasis on voluntary participation, data accuracy,
positive incentives and fostering the doctor-patient relationship, and
detailed guidelines for designing and implementing these programs. Positions
by other physician organizations question the validity of performance
measures, and whether it will preserve an individual physician's clinical
judgement, a patient's preferences, autonomy and privacy. They question
whether it will lower costs, although it will increase administrative costs.
American Academy of Family Physicians: "there are a multitude of
organizational, technical, legal and ethical challenges to designing and
implementing pay for performance programs"
American College of Physicians: "adoption of appropriate quality
improvement strategies, if done right, will result in higher quality patient
care leading to increased physician and patient satisfaction. But the College is
also concerned that these changes could lead to more paperwork, more expense,
and less revenue; detract from the time that internists spend with patients, and
have unintended adverse consequences for sicker and non-compliant patients." "...
concerned about using a limited set of clinical practice parameters to assess
quality, especially if payment for good performance is grafted onto the current
payment system, which does not reward robust comprehensive care."
American Geriatrics Society: "quality measures target not only care for
specific diseases, but also care that addresses multiple, concurrent illnesses
and tested among vulnerable older adults. Using indicators that have been
developed for a commercially insured population...may not be relevant"
American Academy of Neurology: "An unintended consequence is that current
relative payments are distorted and represent a misaligned incentive system,
encouraging diagnostic tests over thoughtful and skilled patient care. The
AAN recommends addressing these underlying inequities before a P4P
program is adopted. The Endocrine Society: "it is difficult
to develop standardized measure across medical specialties...variations must be
allowed to meet the unique needs of the individual patient...P4P programs should
not place financial or administrative burdens on practices that care for
underserved patient populations" Implementation
= United Kingdom = In the United Kingdom, the National
Health Service began a major pay for performance initiative in 2004, known as
the Quality and Outcomes Framework. General practitioners agreed to
increases in existing income according to performance with respect to 146
quality indicators covering clinical care for 10 chronic diseases,
organization of care, and patient experience. For example, family
practitioners got points for clinically reviewing patients with asthma every 15
months. Unlike proposed quality incentive programs in the United States,
funding for primary care was increased 20% over previous levels. This allowed
practices to invest in extra staff and technology; 90% of general practitioners
use the NHS Electronic Prescription Service, and up to 50% use electronic
health records for the majority of clinical care.
A 2006 study found that most of the doctors actually did get most of the
points, although some practices seemed to have gotten high scores by excluding
patients with high-risk factors from their percentage targets. The 8,000
family practitioners included in the study had an increase in revenue by
$40,000 by collecting nearly 97% of the points available.
A 2014 study examined 1.8 million hospital charts, and found that the
mortality in control hospitals fell more than mortality in the
pay-for-performance hospitals. Short-term improvements were not
maintained. There was some evidence that mortality was declining in the three
conditions covered by the program, at the expense of other conditions not
covered in the program. = United States =
California Responding to public backlash to managed
care in the 1990s, California health care plans and physician groups
developed a set of quality performance measures and public "report cards",
emerging in 2001 as the California Pay for Performance Program, now the largest
pay-for-performance program in the country. Financial incentives based on
utilization management were changed to those based on quality measures.
Provider participation is voluntary, and physician organizations are accountable
through public scorecards, and provided financial incentives by participating
health plans based on their performance. Medicare
In the United States, Medicare has various pay-for-performance initiatives
in offices, clinics and hospitals, seeking to improve quality and avoid
unnecessary health care costs. The Centers for Medicare and Medicaid
Services has several demonstration projects underway offering compensation
for improvements: Payments for better care coordination
between home, hospital and offices for patients with chronic illnesses. In
April 2005, CMS launched its first value-based purchasing pilot or
"demonstration" project- the three-year Medicare Physician Group Practice
Demonstration. The project involves ten large, multi-specialty physician
practices caring for more than 200,000 Medicare fee-for-service beneficiaries.
Participating practices will phase in quality standards for preventive care
and the management of common chronic illnesses such as diabetes. Practices
meeting these standards will be eligible for rewards from savings due to
resulting improvements in patient management. The First Evaluation Report
to Congress in 2006 showed that the model rewarded high quality, efficient
provision of health care, but the lack of up-front payment for the investment
in new systems of case management "have made for an uncertain future with
respect for any payments under the demonstration."
A set of 10 hospital quality measures which, if reported to CMS, will increase
the payments that hospitals receive for each discharge. By the third year of the
demonstration, those hospitals that do not meet a threshold on quality will be
subject to reductions in payment. Preliminary data from the second year of
the study indicates that pay for performance was associated with a
roughly 2.5% to 4.0% improvement in compliance with quality measures,
compared with the control hospitals. Dr. Arnold Epstein of the Harvard School of
Public Health commented in an accompanying editorial that
pay-for-performance "is fundamentally a social experiment likely to have only
modest incremental value." Rewards to physicians for improving
health outcomes by the use of health information technology in the care of
chronically ill Medicare patients. Negative incentives
As a disincentive, CMS has proposed eliminating payments for negative
consequences of care that results in injury, illness or death. This rule,
effective October 2008, would reduce payments for medical complications such
as "never events" as defined by the National Quality Forum, including
hospital infections. Other private health payers are considering similar
actions; the Leapfrog Group is exploring how to provide support to its members
who are interested in ensuring that their employees do not get billed for
such an event, and who do not wish to reimburse for these events themselves.
Physician groups involved in the management of complications, such as the
Infectious Diseases Society of America, have voiced objections to these
proposals, observing that "some patients develop infections despite application
of all evidence-based practices known to avoid infection", and that a punitive
response may discourage further study and slow the dramatic improvements that
have already been made. Multiple providers for complex disorders
Pay for performance programs often target patients with serious and complex
illnesses; such patients commonly interact with multiple healthcare
providers and facilities. However, pilot programs now underway focus on simple
indicators such as improvement in lab values or use of emergency services,
avoiding areas of complexity such as multiple complications or several
treating specialists. A 2007 study analyzing Medicare beneficiaries’
healthcare visits showed that a median of two primary care physicians and five
specialists provide care for a single patient. The authors doubt that
pay-for-performance systems can accurately attribute responsibility for
the outcome of care for such patients. The American College of Physicians
Ethics has expressed concern: Pay-for-performance initiatives that
provide incentives for good performance on a few specific elements of a single
disease or condition may lead to neglect of other, potentially more important
elements of care for that condition or a comorbid condition. The elderly patient
with multiple chronic conditions is especially vulnerable to this unwanted
effect of powerful incentives. Deselection, ethical issues
Present pay-for-performance systems measure performance based on specified
clinical measurements, such as reductions in glycohemoglobin for
patients with diabetes. Healthcare providers who are monitored by such
limited criteria have a powerful incentive to deselect patients whose
outcome measures fall below the quality standard and therefore worsen the
provider's assessment. Patients with low health literacy, inadequate financial
resources to afford expensive medications or treatments, and ethnic
groups traditionally subject to healthcare inequities may also be
deselected by providers seeking improved performance measures.
Public Reporting In Minnesota, Minnesota Community
Measurement ranks providers on multiple categories such as patient experience
and total cost of care and provides public reporting online to inform
consumers. The service is designed to help purchasers make better decisions
when seeking care and to provide feedback to providers for areas that
need improvement. References
See also Bundled payment
Capitation Evidence based medicine
Guideline Health maintenance organization
Patient safety