Pay-for-Performance Update

RAND researchers investigated the nations largest pay-for-performance (P4P) system, California’s Integrated Healthcare Association’s P4P. This system represents 225 independent practice associations and integrated medical groups covering over 6 million patients. The enrollees of this program have insurance coverage which provides 60 percent of the revenue stream of the 35,000 physicians involved. Over a span of four years, $203 million was paid out as P4P incentives. This study sampled 35 physician organizations and performed semi-structured telephone interviews to gather data.

Results indicated that overall incentive payments were small relative to total physician income ($1500 – $8500). Most organizations felt that at least ten percent of physician income needed to be subject to performance payments in order to entice behavioral change. Physician groups with better P4P performance were more likely to support this concept (4.7 out of 5.0 Leikert-scale rating) versus lower performing organizations (3.8 out of 5.0; p=0.03). Higher performing organizations also put a higher value on health information technology (4.4 out of 5.0) versus lower performing groups (3.3 out of 5.0; p=0.018).

The caveats to take away included adverse consequences of P4P programs such as shunning sicker patients to game the system. Also, some physician organizations remain skeptical that performance improvement occurred because of improved measurement as opposed to real changes in the quality of clinical services. Lastly, there was no evidence for cost savings in exchange for quality performance.

 

Commentary:

As we repeatedly mention, pay for performance is an interesting concept in order to begin to align health care provider incentives with what matters – the quality of care delivered to the patient. Yet we have failed to see significant behavioral changes. Perhaps the stakes are still too low; physicians and other providers need to take on more risk and thereby accept more reward for doing well. Pay-for-performance must continue to evolve to a risk-adjusted system with uniform measures across payers in order to make it fair to providers. 

Health Affairs, 28, no. 2 (2009): 517-525

 

by

Cedric K. Dark, MD, MPH