1. What is Pay for Performance?
David J. Satin MD
Assistant Professor, Dept. Family Med & Com Health Post Doctoral Fellow, Center for Bioethics Committee Member, AMA Geriatrics P4P Committee

2. Pay-for-Performance (P4P) Definition
“The use of incentives to encourage and reinforce the delivery of evidence-based practices and health care system transformation that promote better outcomes as efficiently as possible.”
Outcomes-Based Compensation: Pay-For-Performance Design Principles th Annual Disease Management Outcomes Summit Johns Hopkins / American Healthways, Nov. 2004

3. The Charitable Interpretation of P4P
P4P reimburses physicians for providing quality care, and finances quality improvement innovations.

4. The Skeptical Interpretation of P4P
P4P enables third party payers to control costs by bribing physicians to follow prescribed practice patterns.

5. The Taking-it-too-personally Interpretation of P4P
Do they really think that the existing moral and social incentives for providing excellent care are insufficient – that financial incentives will succeed where my professional character failed?

6. What is P4P?
Third party payer or health system awards periodic bonus to clinicians and/or practices that reach particular quality goals.
Quality goals are typically consistent with the National Committee for Quality Assurance’s Health Plan Employer Data and Information Set (HEDIS) quality markers.
1. Foubister, Vida. “Issue of the Month: Pay-for-Performance in Medicaid” The Commonwealth Fund. Accessed 8/29/05

7. Quality goals may be in areas of:
Structure: e.g. Having an electronic medical record
Process: e.g. Adherence to professional guidelines such as checking a hemoglobin A1c every 3 months in patients with DM2
Outcomes: e.g. Hemoglobin A1C <7.0 in patients with DM2
2. Outcomes-Based Compensation: Pay-For-Performance Design Principles, 4th Annual Disease Management Outcomes Summit, Johns Hopkins / American Healthways, Nov. 2004

8. Who sets the goals?
P4P programs vary by third party payer or health system.
Some require a 90% childhood vaccination rate, others 80%.
Some goals vary annually based on last year’s top clinics’ results.
Some require improvement over last year’s results.
Some restrict their P4P criteria to patients with their insurance.
Some base their bonuses on the care of a clinic’s entire population.
Personal investigation of Minnesota’s major insurers including Medica, HealthPartners, Blue Cross Blue Shield, UCare; interviews, internet search on insurance websites, and internal UMN DFMCH documents, 9/2005.

9. The Money
Some P4P program “bonuses” truly represent new funds while others represent a 3% “withhold” across the board from the current fee-for-service schedule.
P4P reimbursements range from 3%-20% of a physician’s fee-for-service reimbursements.
Personal investigation of Minnesota’s major insurers including Medica, HealthPartners, Blue Cross Blue Shield, UCare; interviews, internet search on insurance websites, and internal UMN DFMCH documents, 9/2005.

10. The P4P Rationale
Physicians change practice patterns in response to substantial changes in methods of reimbursement.
Average length of hospital stay halved since DRG payments began in 1980s.
Achieving HEDIS quality measures and adhering to professional guidelines result, on average, in better patient outcomes.
2. Outcomes-Based Compensation: Pay-For-Performance Design Principles, 4th Annual Disease Management Outcomes Summit, Johns Hopkins / American Healthways, Nov. 2004
3. Werner RM, Bradlow ET. Relationship between Medicare’s hospital compare performance measures and mortality rates. JAMA. 296(22): , 2006 Dec 13.

11. Cite economic, clinical, social, and moral benefits and burdens likely to result from P4P reimbursement.

12. DISCLAIMER!
All forms of physician reimbursement (fee-for-service, capitation, salary…) have benefits and burdens to patients, physicians, third party payers, and society.
3. Goold, S. Trust and Physician Payment. Healthcare Executive, July/Aug 1998

13. Selected BENEFITS of P4P
P4P finances quality improvement projects.*
Under P4P it does not matter how you meet the quality criteria.
Unprofitable enterprises under fee-for-service become valuable through P4P bonuses:
Investing in additional support staff, social work, patient advocate
Implementing an EMR
Patient education
Developing a therapeutic relationship towards better patient compliance
* Charitable interpretation of P4P – contrast with skeptical interpretation in Selected BURDENS of P4P

14. Selected BENEFITS of P4P
Aligns goals of clinical care with payment.
If your suboptimal care results in patient complications, under most fee-for-service arrangements, you would ultimately receive greater reimbursement resulting from the extra services you would provide.
P4P derives some of the benefits of capitation.
Quantity ought not be the only determinant of reimbursement.

15. Selected BENEFITS of P4P
Encourages more standardized care.
There is currently very little financial incentive to adhere to clinical guidelines and monitor quality.
P4P provides a financial incentive to close the chasm4 between the health care patients could receive and the health care they do receive.
4. Crossing the Quality Chasm: The IOM Health Care Quality Initiative.

16. Selected BENEFITS of P4P
Healthier patients can be cared for more cheaply and are more productive.
Adam Smith’s Wealth of Nations5 outlined this societal benefit in 1776 and it holds true today.
Insurance corporations provide P4P bonuses to providers on the strength of this economic proposition.
5. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen and Co., Ltd., ed. Edwin Cannan, Fifth edition. First published: 1776.

17. P4P Potential BENEFITS Summary
Finances quality improvement projects
Aligns goals of care with payment
Encourages more standardized care
Healthy patients = health care savings

18. Data collection is burdensome.
Selected BURDENS of P4P
Data collection is burdensome.
Time consuming to collect data to present to payers vs using billing codes.
Administration may detract from time with patients.
Our department hired an extra faculty physician to organize quality improvement efforts and data collection.

19. Selected BURDENS of P4P Quality data collection is very burdensome.
No bonus for you! In 2005, too many ER visits.
Review of one month’s ‘asthma patients’ seen in ER:
3/12 patients had never been seen in our clinic (‘invisible patients’ assigned to us by the health plan)
2/12 did not have asthma
Of the remaining 7/12, some had their first attack, others had mild intermittent asthma, others hadn’t been seen in over 2 yrs.
6. Harper, P. Assistant Professor, Dept. of Family Med and Community Health, UMN. Personal interview, 9/19/2005.

20. Selected BURDENS of P4P Up front investment may be large & risky.
Income variability introduced by P4P may complicate clinic and personal budgeting.7
Small practices may go under if the implementation of their EMR does not net P4P bonuses.
Some practices, especially rural practices, may not have the equity or community resources to compete.
7. Metsemakers, J. Professor of General Practice, Department Chair, U of Maastricht. Personal interview 9/7/2005.

21. Selected BURDENS of P4P Altered physician-patient relationship.
Will physicians get angry with patients who refuse blood draws or no-show referred diabetic eye exams?
Will patients feel disrespected if their physicians urge them at every appointment to comply with the guidelines?
Will physicians be able to facilitate non-coerced, informed decision making?
8. Weiss G, What would you do? New issues in medical ethics. Medical Economics, Aug 2006, p56-61
9. Satin, DJ. The Impact of Pay-for-Performance Beyond Quality Markers – A Call for Bioethics Research. Bioethics Examiner, University of Minnesota Center for Bioethics, Fall 2006.

22. Selected BURDENS of P4P Erosion of medical professionalism.*
What does it imply to physicians if financial incentives succeed where moral and social incentives failed to improve quality?
Medical students’ choice of specialty correlates with debt.10,11
Slippery slope of quality markers (underuse vs overuse measures).
* Skeptical interpretation of P4P - contrast with charitable interpretation in Selected BENEFITS of P4P
10. Tonkin P. Effect of rising medical student debt on residency specialty selection at the University of Minnesota. Minnesota Medicine, June 2006, p46-49
11. Rosenblatt RA, Andrilla CH. The impact of U.S. medical students' debt on their choice of primary care careers: an analysis of data from the 2002 medical school graduation questionnaire. Academic Med, 2005 Sep;80(9):815-9

23. Selected BURDENS of P4P P4P discourages clinical judgment.
P4P programs typically do not allow for exceptions.
CMS denominator exclusions:
Patient reason
Medical reason
System reason
Intersecting guidelines can be dangerous.12
12. Boyd CM. Darer J. Boult C. Fried LP. Boult L. Wu AW. Clinical practice guidelines and quality of care for older patients with multiple comorbid diseases: implications for pay for performance. JAMA 294(6):716-24, 8/10/2005.

24. Selected BURDENS of P4P Sicker patients may get worse care
Sicker patients have a harder time accessing care when clinicians are rewarded for healthier patients under P4P.13
Special programs for Diabetics with an A1C close to goal (7-8), but nothing for patients with an A1C far from goal (>10).
Risks of Diabetic complications rise exponentially with a rise in A1C.14,15
13. Shen Y. Selection incentives in a performance-based contracting system. Health Serv. Res. 2003;38:535-52
14. United Kingdom Prospective Diabetes Study. (UKPDS)
15. Diabetes Control and Complications Trial (DCCT).

25. P4P may increase health care disparities
Selected BURDENS of P4P
P4P may increase health care disparities
Rural, minority, and low socioeconomic status patients all have, on average, worse outcomes.16
These patients may be systematically excluded from practices, much like medical assistance is currently.
Clinics serving a higher than average proportion of these patients will be financially disadvantaged.17
16. Zaslavsky, A.M., J.N. Hochheimer, et al. “Impact of sociodemographic case mix on the HEDIS measures of health plan quality.” Med Care 38(10): , 2000.
17. Satin, DJ. Paying Physicians and Protecting the Poor. Minnesota Medicine, Apr. 2006, p42-44

26. Selected BURDENS of P4P P4P is experimental.
Which benefits and burdens will present under which circumstances remains unknown.
Data regarding the effectiveness of P4P is mounting.
Data regarding the adverse effects of P4P is negligible.*
Current generation P4P incentives are not designed for cost savings and may actually increase health-care costs.
* See next section for commentary on the current state of the evidence.

27. P4P Potential BURDEN Summary
Good quality data collection is burdensome
Large, risky up-front investment
Altered physician-patient relationship
Erosion of medical professionalism
Clinical judgment discouraged
Sicker patients get worse care
Increased health care disparities
Experimental

28. A Word About the Evidence
Over the past year, there has been an explosion of data demonstrating the intermediate level success of P4P programs.18,19
Public reporting of data appears to have an additive effect on improvement in outcomes.20
18. Rosenthal MB, Frank RG, Li Z, Epstein AM. Early experience with pay-for-performance: from concept to practice. JAMA 2005;294:1788–1792.
19. Petersen L, Woodard L, Urech T, Daw C, Sookanan S. Does Pay-for-Performance Improve the Quality of Health Care? Annals of Internal Medicine 2006;145(4):
20. Rowe JW. Pay-for-performance and accountability: related themes in improving health care. Annals of Internal Medicine. 145(9):695-9, 2006 Nov 7.

29. A Word About the Evidence
More clinically significant hospital-based outcomes such as death from pneumonia, CHF, and MI have not been clearly demonstrated.21
There remains little data addressing the potential adverse effects of P4P.22,19
21. Werner RM, Bradlow ET. Relationship between Medicare’s hospital compare performance measures and mortality rates. JAMA. 296(22): , 2006 Dec 13.
22. Rosenthal MB. Dudley RA. Pay-for-performance: will the latest payment trend improve care? JAMA. 297(7):740-4, 2007 Feb 21.
19. Petersen L, Woodard L, Urech T, Daw C, Sookanan S. Does Pay-for-Performance Improve the Quality of Health Care? Annals of Internal Medicine 2006;145(4):

30. Starter References
Outcomes-Based Compensation: Pay-For-Performance Design Principles, 4th Annual Disease Management Outcomes Summit, Johns Hopkins / American Healthways, Nov
American Academy of Family Physicians (AAFP) P4P Guidelines. Accessed 8/29/2005.
Petersen L, Woodard L, Urech T, Daw C, Sookanan S. Does Pay-for-Performance Improve the Quality of Health Care? Annals of Internal Medicine 2006;145(4):
Rosenthal MB. Dudley RA. Pay-for-performance: will the latest payment trend improve care? JAMA. 297(7):740-4, 2007 Feb 21.