Pay-for-performance programs aim to motivate quality improvement by rewarding providers for delivering high-quality care. With the increasing interest in healthcare quality improvement, these programs endeavor to align financial incentives with quality improvement goals, thereby overlaying the fee-for-service structure of healthcare with a system that rewards the best providers. While P4P programs currently focus on primary care physicians and hospitals, recent trends indicate that these initiatives will expand to include specialists within the next few years.
Although P4P has existed in various forms for years, its recent popularity in healthcare can be traced to several highly publicized reports criticizing quality of care in the American medical system. The Institute of Medicine published two of the most influential reports, To Err is Human and Crossing the Quality Chasm, in 1999 and 2001, respectively. These reports focused on significant quality and patient safety failures in the healthcare system, emphasizing the financial costs of high rates of medical errors. The 2001 report, a key recommendation of which was the alignment of payment policies with quality improvement, sparked the current interest in P4P programs.
In response to these reports, health plan sponsors, employers, and more recently the Centers for Medicare and Medicaid Services, have turned to P4P as a way to improve quality of care and increase member satisfaction by ensuring that they are paying for the best possible care. P4P initiatives have rapidly proliferated as a result, with nearly 33 percent growth in 2004 alone. P4P programs now include 35 million health plan members and beneficiaries, representing over 30 percent of all present HMO membership. Commercial health plans are sponsoring the majority of the approximately 84 P4P programs, although the CMS, with five P4P programs as of December 2004, is becoming increasingly active in this area.
The swift growth of P4P over the past four years, combined with the lack of historical data to support best practices, has led to widespread variation in plan design. Despite the many differences, nearly all P4P programs consist of the same four structural components: performance measures, data collection methods, performance targets, and financial incentives. Most sponsors base their performance measures on widely accepted clinical practice guidelines and measures, such as the evaluation process known as the Health Plan Employer Data and Information Set, known as HEDIS. To collect data for performance measurements, P4P sponsors often use a combination of self-reported data and claims data to determine provider performance. Programs increasingly are emphasizing the importance of self-reported data, with some initiatives even offering bonuses for providers who invest in information technology.
| Programs must gain provider support by closely collaborating with physicians during the initial development stages. |
In designing the four components of a P4P program, sponsors face many barriers to implementation and adoption. For P4P to be successful, these programs must effectively change provider behavior by aligning financial incentives with quality improvement goals. The greatest challenges for sponsors are developing large-scale programs that have the leverage to effect change in provider behaviors and obtaining sufficient funding to implement and administer these programs. P4P programs also must define clear, broadly accepted performance measures in order to gain physician support. The programs must overcome technology infrastructure obstacles to data collection, often by enabling physicians to invest in technology so that their programs can use self-reported data rather than claims data. Most importantly, the programs must gain provider support by closely collaborating with physicians during the initial development stages.
P4P sponsors have managed to overcome many of these obstacles when creating programs for primary care physicians, who are included in 94 percent of current initiatives. P4P sponsors now are beginning to include specialists in their programs. According to the recent Med-Vantage study, some 42 percent of P4P programs now involve specialists. The programs target a range of specialists, including gastroenterologists, orthopedic surgeons, gynecologists, and cardiologists. Neurosurgeons have not commonly been involved in P4P programs, but a pattern of including high-volume specialists in them clearly is emerging.
The move toward including specialists in P4P programs can be viewed as one step in the development of the P4P movement as a whole. P4P programs are expanding through a three-stage development process, with most programs still in the first stage. In this initial phase, programs examine the performance of primary care physicians using measures based on the HEDIS measures. P4P programs move into the second stage of development when they expand their performance measures and financial incentives to include specialists and begin publicly reporting quality data. In the third stage of P4P development, programs offer a fully developed program that examines performance for primary care physicians and specialists, releases comprehensive report cards to the public, and uses information technology to improve quality through e-prescribing, patient registries, and automated reminders. While few, if any, P4P programs are in the third stage, many are moving from the first stage to the second stage. Within the next three to four years, it is likely that most P4P programs will reach the second stage and begin including specialists.
| P4P programs, as they continue to expand, will move beyond the primary care physician to include specialists. |
As P4P programs expand to include specialists, sponsors likely will try to build on their experiences with primary care physicians, for whom sponsors were able to build on generally accepted HEDIS measures and clinical practice guidelines. There are far fewer guidelines for specialty fields such as neurosurgery, and many specialists resist creating broad guidelines, pointing out that clinical decision-making is not straight-forward in complex specialty fields. Specialists also maintain that measuring quality in a field such as surgery is far more subjective and complicated than measuring the use of standard procedures, such as immunizations, by primary care physicians. To expand P4P programs to specialists, program sponsors will need to work closely with specialists to develop measures that will be broadly accepted.
P4P may move into specialty fields more rapidly if programs can follow the lead of the CMS. As a result of the Medicare Modernization Act of 2003, the CMS has initiated several new demonstration projects that measure physician performance and offer financial incentives to those who improve quality and efficiency. These programs aim to encourage physicians to adhere to best practice guidelines and adopt information technology, and they measure performance with process and clinical measures. While these programs currently focus on primary care physicians, it is likely that the CMS will soon begin to include specialists, particularly if the early data from these projects is positive. Certainly, in its March 2005 report to Congress, the Medicare Payment Advisory Commission recommended that Medicare moves toward basing a portion of payment to providers on their quality of performance.
Although P4P programs have rapidly grown in size and scope over the past several years, there is still little empirical evidence to support the claims that these programs can improve quality of care while reducing overall costs. Despite the lack of evidence, enthusiasm for P4P is unlikely to diminish soon, given the widespread interest in improving quality of care, the amount of funds currently devoted to these initiatives, and the expanding role of the federal government in supporting the movement. P4P programs, as they continue to expand, will move beyond the primary care physician to include specialists.
For P4P programs to include specialists successfully, the sponsors must work with specialty groups and physicians to develop clinical measures and guidelines that will be widely accepted. These guidelines and measures are the critical piece of including neurosurgeons and other specialists in P4P, and it is likely that more attention will be devoted to developing and publicizing such guidelines and measures in the near future. In anticipation, neurosurgery might consider a proactive approach to developing its own standard measures and obtaining early experience ahead of the CMS or payer-driven programs.
Michelle Bertagna is project manager, and Richard Gliklich, MD, is president of Outcome, www.outcome.com, a provider of post-approval strategies and solutions including pay-for-performance programs. Dr. Gliklich is author of the book Profiting From Quality: Outcomes Strategies for Medical Practice.