Pay for Performance - In Evaluating P-4-P, Consider the Source

When evaluating the value of P4P, consider the source.

CMS Press Release

Read the latest CMS press release, “Physician Groups Improve Quality and Savings Under Medicare Physician Pay for Performance Demonstration,“ and P4P would seem an unqualified success, to wit, “The Centers for Medicare & Medicaid announced today that all participating physician groups improved the clinical management of diabetes patients in the first year of the three-year Medicare Physician Group Practice Demonstration (PGP Demonstration.” The casual reader might think it doesn’t get any better than that: improve care and save money. What more could one ask?

American Medical News

Read the August 6 AMA News, and you’ll get a different spin, “P4P Pays Off for Medicare, but Not for Most Doctors Involved.” The article says eight of the 10 medical groups involved in the study said costs required to meet P4P reforms exceeded bonuses. In other words, the amount of the money most groups “saved” in improving “quality” didn’t qualify them to share in P4P payment rewards. Groups were unable to get money back from Medicare to pay for improvements. Furthermore, the government changed its initial reward rules in midstream by saying at first all savings would count but adding later that only savings exceeding 2% would count. Nine of 10 groups had some savings. Dartmouth-Hitchcock medical director complained, “They changed the rules in the middle of the game?” So much for government trustworthiness.

The New England Journal of Medicine

Authors of articles and editorial in the NEJM ride the fence. A two year study of 613 hospital P4P programs achieved only modest gains of 2.6% to 4.1%, and authors concluded “Additional research is required to determine whether different incentives might stimulate more improvement or whether benefits of these programs outweigh their costs.” An accompanying editorial hedged even more,” The reality, however, is that we are at the tipping point with pay-for-performance programs, and such information is unlikely to be forthcoming before political pressure forces policymakers to act. In this situation, the CMS may have much to gain from recognizing that pay for performance is fundamentally a social experiment likely to have only modest incremental value."

Harvard Business School Professor

Regina Herzlinger, PhD, professor of business administration at Harvard Business School and the “godmother of consumer driven care,” is less kind. In Who Killed Health Care (McGraw Hill, 2007), she comments, “ Congress is now practicing medicine. Its pay-for-performance (P4P) initiatives enable governments to tell health care providers how to practice medicine. The higher the performance, the higher we pay. The health care system lacks metrics of performance. Despite its name, P4P does not pay for performance – the attainment of improved care at a reasonable price. Instead, it pays for conformance – the adherence to a government-dictated recipe for the provision of health care. The government pays for adherence for its recipes for the process of delivering health care rather than for outcomes.”
The End Game

As you ponder these different points of view, remember there are two types of metrics – process and outcome metrics. P4P currently rests solely on process metrics in the form of percent of quality indicators achieved. Outcome metrics, however, are things that really matter – morbidity and mortality, adherence to therapy, good patient experience, altered behaviors, patient understanding and control of their disease. Those are the goals of the end game, and P4P is not there yet