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Taking a Lesson from Taiwan

Is pay-for-performance doomed in a multi-payer system?

Government payers like are attempting to move away from the current fee-for-service model of health care billing—which some believe provides incentive for doctors to perform unnecessary tests and procedures—in favor of a new payment model: . Pay-for-performance programs link performance on clinical quality benchmarks to the salaries of physician-employees.

Source: Daniel Aguilera Sánchez (Flickr/CC)

Source: Daniel Aguilera Sánchez (Flickr/CC)

To get a better idea of how this might pan out, we can look overseas. Improved cost-effectiveness of diabetes care was noted in Taiwan when two phases of pay-for-performance payment designs were implemented. Phase one of the program gave higher payments to physicians who enrolled patients in the program and, in phase two, additional payments to physicians who had improved quality measures in blood sugar levels and LDL cholesterol. Mathematical modeling of confounding variables in both phases of the program showed that the two groups were comparable in complexity and chronicity of diabetes as well as location of hospital institutions with variable quality measures. Cost saving measures were noted in all-cause medical costs as well as intervention costs but a lesser degree of cost savings in interventions. Significant increases in economic evaluations (LYs and QALYs) were noted in both phases of the implementation of pay-for-performance programs.

Despite the successful quality improvement and cost-cutting results noted in the single-payer system of Taiwan, it is unclear if similar results could be translated in the US health care system given the market differences between a single-payer structure (where patient access to providers is equal) and the current US structure (where physicians can choose patients by allowing or not allowing a selected payer).

The optimists in the health policy field would like to believe that pay-for-performance is simply a resetting of the status quo, which will take considerable time and effort, but ultimately benefit the health care profession and our patients in the long term. The pessimists are concerned physicians who see their reimbursement cut will respond by refusing to serve their sickest, most chronically ill and frequently hospitalized patients. In so doing, they raise the “quality” of care they provide, and lower the cost at the same time. This reaction to pay-for-performance would only further accelerate a current trend in medicine, which is seeing many physicians refuse to accept new Medicare patients.

Many pay-for-performance programs don’t address the underlying motivations of health care providers. Whether doctors and nurses deliver high quality care (or not) have little to do with money.  These motivations include wanting to help others, impress and compete with their peers, avoid lawsuits, or the internal self-motivation that allowed us to get through years of studying and training. The health care economy is unlike any other system, and will call for a new, more nuanced analysis to find the optimal payment system that will benefit both patients and doctors.

commentary by Jennifer Shine Dyer, MD, MPH, FAAP


BACKGROUND: Taiwan’s National Health Insurance (NHI) Program implemented a diabetes pay-for-performance program (P4P) based on process-of-care measures in 2001. In late 2006, that P4P program was revised to also include achievement of intermediate health outcomes. OBJECTIVES: This study examined to what extent these 2 P4P incentive designs have been cost-effective and what the difference in effect may have been. RESEARCH DESIGN AND METHOD: Analyzing data using 3 population-based longitudinal databases (NHI’s P4P dataset, NHI’s claims database, and Taiwan’s death registry), we compared costs and effectiveness between P4P and non-P4P diabetes patient groups in each phase. Propensity score matching was used to match comparable control groups for intervention groups. Outcomes included life-years, quality-adjusted life-years (QALYs), program intervention costs, cost-savings, and incremental cost-effectiveness ratios. RESULTS: QALYs for P4P patients and non-P4P patients were 2.08 and 1.99 in phase 1 and 2.08 and 2.02 in phase 2. The average incremental intervention costs per QALYs was TWD$335,546 in phase 1 and TWD$298,606 in phase 2. The average incremental all-cause medical costs saved by the P4P program per QALYs were TWD$602,167 in phase 1 and TWD$661,163 in phase 2. The findings indicated that both P4P programs were cost-effective and the resulting return on investment was 1.8:1 in phase 1 and 2.0:1 in phase 2. CONCLUSIONS: We conclude that the diabetes P4P program in both phases enabled the long-term cost-effective use of resources and cost-savings regardless of whether a bonus for intermediate outcome improvement was added to a process-based P4P incentive design. PMID: 25397966

Hsieh, HM, et al. Med Care. 2014 Nov 13 [E-pub].

Jennifer Shine Dyer, MD, MPH, FAAP
About Jennifer Shine Dyer, MD, MPH, FAAP

Jennifer Shine Dyer, MD, MPH, FAAP is a pediatric endocrinologist in private practice at Central Ohio Pediatric Endocrinology and Diabetes Services (COPEDS) in Columbus, Ohio. Contact: Website | Facebook | Twitter | More Posts