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Medicine and Public Policy |

Pay-for-Performance and Accountability: Related Themes in Improving Health Care FREE

John W. Rowe, MD
[+] Article and Author Information

From Columbia University, New York, New York.


Note: This article is based on the Harvey Kimball lecture given by the author at the 2005 American Board of Internal Medicine Summer Conference.

Grant Support: None.

Potential Financial Conflicts of Interest:Employment: Aetna, Inc.; Stock ownership or options (other than mutual funds): Aetna, Inc.

Requests for Single Reprints: John W. Rowe, MD, Columbia University, Mailman School of Public Health, 600 West 168th Street, 6th Floor, New York, NY 10032; e-mail, Jwr2108@columbia.edu.


Ann Intern Med. 2006;145(9):695-699. doi:10.7326/0003-4819-145-9-200611070-00013
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Value-based purchasing, or pay-for-performance, is a major emerging theme in U.S. health care. Forces enhancing adoption of pay-for-performance programs include continued increases in medical costs beyond overall economic growth, a body of evidence that the quality of health care provided to patients is not directly related to the volume of services received, increasing evidence to serve as a basis for the development of standards against which to measure clinical performance, and increasing acceptance by physician organizations and individual practitioners of the rationale underlying these efforts. In this context, employers, government payers, and health plans are establishing a wide variety of pay-for-performance programs. This article reviews the critical design features of such efforts, describes the current types of programs on offer, and comments on the implications of this emerging movement for the future of health care in the United States.

The recent surge of interest in value-based purchasing, or pay-for-performance, reflects a shift from preoccupation with the dramatic and continuous increases in health care costs to increasing concern about getting value commensurate with cost (1). When designed effectively, pay-for-performance targets all 3 measures of clinical performance: clinical quality, efficiency, and patient satisfaction. Most early initiatives to pay health care providers for providing evidence-based services, such as nominal payments aimed at enhancing immunization rates, were modest and narrowly focused. Over the past 5 years, efforts to improve quality of care through financial and other incentives have increased dramatically. More than 100 such programs currently exist. Reviews of the literature about early pay-for-performance programs indicate that the benefits are, at best, modest and strongly influenced by design features, although recent experience with greater financial incentives suggests a greater effect on performance (25).

When I started my career in the late 1970s as an academic internist and geriatrician, I was skeptical of pay-for-performance, feeling that standards of care could not accurately assess the real benefits of my care of my frail elderly patients with multiple impairments. I still feel that way today because despite the rapid growth of the evidence base, we continue to measure relatively simple aspects of the process of care rather than measuring outcomes. I also felt then that pay-for-performance was a thinly veiled effort to increase efficiency rather than quality. Subsequent experience as the leader of a large academic health science center and as chief executive officer of a major health insurer has led me to believe that pay-for-performance holds substantial potential for enhancing quality of care. Fueled by the emergence of increasingly good evidence and relentless pressure from government and private payers to provide value, I feel the time may come when a substantial portion of physician compensation in the United States will be pay-for-performance–driven. Although I feel a sense of urgency, I recognize that broad application of pay-for-performance will depend on more widespread adoption of the electronic medical record, where progress seems to be moving at a glacial pace despite the obvious advantage of universal agreement about its important role in improving the reporting of quality of care.

The medical profession is making formal commitments to be accountable in response to the surge of interest in evidence-based medicine and concerns about overuse of health care services. These commitments provide a moral and professional rationale for physicians and physician organizations to support efforts to control costs, improve quality of care, and participate in pay-for-performance initiatives. The American Board of Internal Medicine Foundation, together with the American College of Physicians–American Society of Internal Medicine Foundation (now the American College of Physicians Foundation) and the European Federation of Internal Medicine, promulgated a physician charter on medical professionalism, including specific professional responsibilities and commitments. One commitment focuses on using better quality-of-care measures across the health system. A second commitment, relating to the just distribution of finite resources, states, “While meeting the needs of individual patients, physicians are required to provide health care that is based on the wise and cost-effective management of limited clinical resources” (6). Although these commitments are well aligned with the goals of pay-for-performance, they emanate from leaders of professional organizations and may not necessarily reflect the views of practicing physicians.

Nevertheless, the results of a 2004 poll of a sample of 400 randomly selected physicians (90% in private practice, 7% hospital based, 83% men, and 47% in primary care) suggest that practicing physicians do support efforts to control cost and quality through value-based purchasing. Seventy-one percent of physicians supported payments based on the quality of care they provide, and well over 60% thought that hospitals should also be paid on this basis. Almost 90% of physicians thought that the current reimbursement system did not reward them for providing high-quality care, and 62% supported public access to information about the quality of care they provide. Not surprisingly, physicians also expressed some concerns about pay-for-performance, especially the difficulty of establishing standards and measuring quality and the possibility that standard setters may not place a high priority on patients' needs (7).

The design considerations in developing pay-for-performance programs include the clinical setting; the patient population; the specific incentives; the targets of the reward and the amount of the reward; and, particularly, the standards of performance (8). In addition, reliable data are central to the success of pay-for-performance. From this perspective, progress depends on widespread adoption.

Clinical Practice

The greater the proportion of the practice that is influenced by the payer (for example, health plan, Medicare, or Medicaid) implementing a pay-for-performance initiative, the more incentive physicians have to respond to the initiative (9). The prevalent mode of payment in the practice is also critical. If the quality improvement target requires additional physician actions (for example, tests, prescriptions, or reports), the likelihood of effectiveness in a practice setting in which these services are paid for individually will be greater than in a capitated practice. Conversely, capitated practices with salaried physicians would more easily adapt approaches aimed at reducing overuse of services. The patient population could affect the likelihood of success. Access to health care varies depending on race and ethnicity. Disparities in access might influence the effectiveness of pay-for-performance initiatives in groups with limited access (10).

Target of the Incentive

Incentive programs often pay only for superior performance. This approach runs the risk of merely redistributing funds from lower-performing physicians to superior performers without changing performance. Improving the overall quality of care in the community requires approaches that reward improvements even though the resulting performance may not be superior. Rosenthal and colleagues (11) described a health plan initiative that generously rewarded the highest-performing groups even though their performance did not change from its pre-incentive level. Lower-performing groups that improved received very modest payments. This type of experience can quickly erode support for pay-for-performance efforts. Programs should reward the level of performance and sustained improvement (12).

Form of the Incentive

Incentives come in different forms. Selection of the most effective incentive is influenced by many factors, including the magnitude of change that the pay-for-performance initiative requires to qualify for the reward. For instance, if the requirement for change is modest, a noncash incentive, such as lessening administrative burdens, may be effective. Channeling patients to preferred providers provides financial benefit to physicians but does not increase the unit cost to the payer. Reputational incentives include making providers' process or outcome results available to patients. To date, public release of information has not significantly affected patient decision making about choosing a physician or health plan (8, 13).

Cash Incentives

An important issue for cash incentives, whether increased fees or bonuses, is the target of the payment. Payments are generally directed toward physicians, disease management entities, hospitals, or clinics. Because many initiatives relate to the performance of interdisciplinary clinical teams, especially for high-quality care for patients with chronic disease or those receiving complex treatment regimens, fair allocation of rewards across team members is important. Payers can reward patients for going to the best providers by lowering the amount they have to pay out-of-pocket.

How much should be paid? In a review of the U.S. experience, where most incentives are modest, the Agency for Healthcare Research and Quality failed to identify a consistent relationship “between the magnitude of the incentive and the response” (3). Most health plan efforts include financial incentives of less than 10% of physician income. The British National Health Service (NHS) has implemented a very substantial incentive for general practitioners, through which physicians can receive up to 25% of their income from quality-of-care–based incentives, a far greater commitment to performance-based payment than seen to date in the United States. Early results from this effort are discussed later in this article.

Development of Standards of Performance

To be acceptable to physicians, quality measures that will determine their rewards must be evidence-based; based on reliable, aggregated, observable performance information; transparent; and clinically important (1415). Many advocate a graded approach, starting by paying for merely reporting data rather than for specific levels of performance. In more advanced approaches, quality metrics include patient satisfaction, health care processes, adoption of computerized physician order entry in hospitals, and health outcomes, either alone or in combination.

Should metrics be simple or complex? Most current standards are simple. They state a basic clinical service that all patients with a certain condition should receive, such as prescription of β-blockers after myocardial infarction. Approximately 5% of patients are responsible for 50% of health care costs. They are typically complex. Therefore, we need standards to evaluate management of patients with chronic disease and multiple comorbid conditions. To achieve this goal, we will need a much richer evidence base than is currently available. In addition, although most current standards are developed to evaluate primary care, specialty care accounts for a disproportionate share of health care costs. Standards must extend to specialty care and to complex patients with multisystem problems (15).

Health Plans

In 2005, 84 health plans sponsored more than 100 value-based purchasing initiatives; among them were Medicare and employers, either alone or in collaborative groups. Although most initiatives are sponsored by a single health plan, 1 large cooperative effort under way in California includes 7 health plans, 215 medical groups, and 45 000 physicians (16). The incentives vary widely, including cash payments to physicians; channeling of patient referrals; lessening of administrative burdens; and special recognition efforts, such as special notations next to physicians' names in lists of network providers.

One approach is to selectively refer patients to “elite” networks of physicians who are chosen on the basis of quality and efficiency. In such programs, health plans often do not increase the payment per patient, but increased patient referrals can increase physician income because the income from these “extra” patients is mostly profit since the physician incurs few additional practice expenses to see such patients. Insurance premiums for such special network “products” are often lower than for the entire network despite the higher quality, because the patients who are treated by physicians in the select network often have shorter hospital stays, fewer complications, and fewer readmissions. The end result of lower cost for better clinical performance supports the long-sought-after business case for quality in health care (17). “Elite” networks that channel patients to preferred doctors as a reward for high quality probably will not be useful in the primary care setting because practitioners with the finest reputations are already deluged with patients.

Medicare

As the single largest payer for most physicians and hospitals treating adult patients, Medicare's pay-for-performance efforts will influence quality of care. The Centers for Medicare & Medicaid Services (CMS) has recently launched an array of projects focused on hospitals, physicians, physician groups, disease management, and chronic care improvement (1820). Medicare requires hospitals to report certain data on quality-of-care initiatives as a condition for eligibility for some payments and provides some payments to support the data collection and reporting. Medicare has also begun a voluntary reporting program for physicians and has begun to directly reward higher quality and cost-effectiveness with cash payments. In addition, CMS is exploring rewards for nursing homes that provide high-quality long-term care.

Employers

Employers, alone or in coalitions, have implemented their own pay-for-performance plans that provide bonus payments to physicians and hospitals, presumably because they believe that quality and cost-effectiveness improvements in employee care are in the employers' best interests. For outpatient activities, the most prominent employer program is the “Bridges to Excellence” program, a 3-component national ambulatory quality improvement program with a focus on diabetes, cardiac care, and physician office management (21). Physicians who demonstrate that they provide high-quality care for patients with diabetes, as measured by the criteria of the National Committee on Quality Assurance and American Diabetes Association, can receive $80 per year per patient in bonus payments. The most prominent inpatient employer-sponsored program is the Leapfrog Group, an innovative coalition of employers committed to improving quality of care (2223). In Leapfrog's initial efforts implemented by health plans, purchasers, or coalitions in many areas across the United States, employers provided hospitals with additional payments for implementing the infrastructure for improving quality, such as computerized physician order entry and staffing intensive care units with board-certified intensivists.

Collaborative Efforts

The Human Resources Policy Association (HRPA) brings together approximately 200 human resource officers from major corporations to develop affordable health care solutions, provide for direct purchasing of pharmaceuticals, and foster regional health care quality reforms (24). The HRPA uses measurement sets that rely on the Leapfrog approaches for hospitals and the Bridges to Excellence efforts in the ambulatory setting.

Two recent collaborations of stakeholders deserve special attention because they are national and have the potential to induce substantial changes. They focus on developing refined national provider performance measures and aggregating nonfinancial claims data (for example, medication use, procedures, and diagnoses) to support application of the performance metrics. Combined data sets, aggregated from many payers, permit a more robust evaluation of a provider's experience or practice than can be obtained from just 1 payer. Collaborative efforts include Care Focused Purchasing, a joint effort of 30 major employers working with a large group of major health plans, and the Ambulatory Quality Alliance, which is a coalition of stakeholder groups that includes leading physician organizations, major corporations, health plans, consumer organizations, and CMS (2526).

Review of current pay-for-performance programs reveals 4 key trends. First, health plan efforts are heterogeneous, seemingly in an exploratory phase as plans seek the most effective strategies to reward quality. Second, Medicare, the largest single payer, has embraced the concept of pay-for-performance and is experimenting with ways to reward quality. Third, employers, very powerful stakeholders, have taken a prominent role. The final theme is collaboration among different stakeholders. The counterpoint to this gathering momentum is the slow progress toward universal adoption of the electronic health record. We are far behind smaller countries in which universal health insurance may be a unifying force.

In the spring of 2004, the NHS of the United Kingdom launched a major pay-for-performance initiative supported by an expansion of the NHS budget. A general practitioner's income can increase nearly 25% according to clinical performance relative to quality indicators for chronic disease management, patient satisfaction, and organization of care. As recently reported (45), in the first year of this ambitious program, physicians achieved higher-than-expected quality scores and earned bonuses averaging more than $40 000 U.S. dollars. This unexpected outcome, which has contributed greatly to the current NHS operating deficit, shows the process of substantial financial incentives.

The strong clinical performance may indicate improved performance in response to large financial incentives, or it may mean that the NHS set the targets too low. In addition, some physicians may have exploited the opportunity to exclude certain patients from evaluation, which makes perfect clinical sense (that is, one should not punish a physician for failing to treat high serum cholesterol levels in a patient with a terminal illness) but is also an opportunity to “game” the system. In fact, some practices did exclude many patients. The U.K. experiment requires further study, from which the United States clearly has much to learn.

New Money or Old?

Physicians have many concerns about pay-for-performance. Foremost are who will establish the standards for quality measurement that have the potential to substantially reduce their income. They often call for “new money” to implement pay-for-performance. However, as seen recently in the United Kingdom, paying higher-performing physicians at historic rates will increase costs, an outcome that employers, government sponsors, and other payers in the United States will not support. A more likely scenario is that over time higher-performing physicians and those demonstrating sustained improvement will receive higher pay, more volume, or other rewards, whereas lower-performing physicians will receive less of each.

Physician Education

Advocates of pay-for-performance believe that physicians can improve their performance. To do so, many will need to acquire additional knowledge and skills. The record shows that physicians who have been in practice for a long time have worse average scores on various measures of quality; they may be apt targets for educational initiatives (27).

This need for learning presents a remarkable opportunity for medical schools, postgraduate training programs, continuing medical education credit-granting programs, medical and specialty societies, and certifying boards. The recent trend toward requiring performance assessment to maintain one's specialty board certification might serve as a basis for certifying boards or specialty societies to collect the performance measures that pay-for-performance programs would use. The utility of these professional databases to serve these 2 purposes may be limited because health plans require data on current performance and some certification programs measure performance at 10-year intervals. In fact, performance data may flow to the certification programs, which will reduce reluctant collection burdens for physicians.

What Will the System Look Like?

Although the movement to reward performance is still in an exploratory phase, recent experience provides clues to future directions. Consensus will probably develop around program designs that prove successful. Tangible progress toward universal access to the electronic medical record is likely. Growing collaboration between groups of health plans and across different groups of stakeholders will facilitate development of large observational databases and more robust understanding of practice patterns, paving the way for a true “learning health system.” These large data sets should provide the evidence to support increasingly sophisticated practice standards that go beyond measuring simple health care processes (such as prescriptions for β-blockers after myocardial infarction) and tackle the management of complex clinical situations. At the same time, patients will know more and more about the costs and quality of the care available to them. Physicians will face enormous pressure to learn and to change practice behavior.

Professional organization and certifying boards must seize the opportunities to lead or watch from the sideline as the influence of the profession wanes. One can envision establishment of a partnership between certifying boards, continuing medical education organizations, health plans, CMS, employers, and other relevant parties to create a common channel for the collection and reporting of clinical performance information. In addition to a central role in the assurance of quality of care for society, participation in shared data pooling would also position professional organizations to influence the development of the next generation of clinical performance standards.

Is pay-for-performance here to stay or is it, as some believe, a passing fad, soon to be replaced by the next big idea? Only time will tell, but for now it seems to be a useful strategy to pursue. Some skeptics fear that pay-for-performance standards will morph into the ultimate “clinical cookbook” that restricts clinical judgment as the recipes improve. I think that this outcome is unlikely. Although access to almost real-time evaluations of clinical performance should reduce undesirable variability across physicians and hospitals, doctors will probably still vary substantially in their practice patterns. Hospitals will continue to vary so much that hardly two are alike. Although evidence-based standards are important, they are only a small part of the practice of medicine. Very good performance against measures of quality of care will become a necessary but not sufficient condition for success in clinical practice. It is hoped that the payment system will learn to reward the personal qualities that patients continue to seek in their physicians.

Chernew ME, Hirth RA, Cutler DM.  Increased spending on health care: how much can the United States afford? Health Aff (Millwood). 2003; 22:15-25. PubMed
CrossRef
 
Rosenthal MB, Frank RG.  What is the empirical basis for paying for quality in health care? Med Care Res Rev. 2006; 63:135-57. PubMed
 
U.S. Department of Health and Human Services.  Public Health Service. Strategies to Support Quality-based Purchasing: A Review of the Evidence. Rockville, MD: Agency for Healthcare Research and Quality; 2004; 04-P024.
 
Doran T, Fullwood C, Gravelle H, Reeves D, Kontopantelis E, Hiroeh U. et al.  Pay-for-performance programs in family practices in the United Kingdom. N Engl J Med. 2006; 355:375-84. PubMed
 
Epstein AM.  Paying for performance in the United States and abroad [Editorial]. N Engl J Med. 2006; 355:406-8. PubMed
 
ABIM Foundation, ACP-ASIM Foundation, European Federation of Internal Medicine.  Medical professionalism in the new millennium: a physician charter. J Am Coll Surg. 2003; 196:113-4. PubMed
 
Association of Health Insurance Plans.  National Survey of Physicians Regarding Pay for Performance. Washington, DC: Association of Health Insurance Plans; 2004.
 
Rosenthal MB, Fernandopulle R, Song HR, Landon B.  Paying for quality: providers' incentives for quality improvement. Health Aff (Millwood). 2004; 23:127-41. PubMed
 
Glied S, Zivin JG.  How do doctors behave when some (but not all) of their patients are in managed care? J Health Econ. 2002; 21:337-53. PubMed
 
Institute of Medicare.  Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care. Washington, DC: National Academy Pr; 2002.
 
Rosenthal MB, Frank RG, Li Z, Epstein AM.  Early experience with pay-for-performance: from concept to practice. JAMA. 2005; 294:1788-93. PubMed
 
Birkmeyer NJ, Birkmeyer JD.  Strategies for improving surgical quality—should payers reward excellence or effort? N Engl J Med. 2006; 354:864-70. PubMed
 
Lee TH, Zapert K.  Do high-deductible health plans threaten quality of care? N Engl J Med. 2005; 353:1202-4. PubMed
 
Ignagni K.  Testimony on Examining Pay-for-Performance Measures and Other Trends in Employer-Sponsored Health Care before the U.S. House Committee on Education and the Workforce Subcommittee on Employer-Employee Relations. Washington, DC: U.S. House of Representatives; 17 May 2005.
 
Epstein AM.  Rolling down the runway: the challenges ahead for quality report cards. JAMA. 1998; 279:1691-6. PubMed
 
Lauer G.  California Pay-for-Performance Programs Draws National Attention. California Healthline. Oakland, CA: California Healthcare Foundation; 8 February 2006.
 
Aetna, Inc.  Aetna Expands Availability of Network Option Based on Clinical Performance and Cost [Press release]. Hartford, CT: Aetna, Inc; 2005.
 
Centers for Medicare & Medicaid Services.  Fact Sheet: Medicare Pay for Performance (P4P) Initiatives [Press release]. Washington, DC: U.S. Department of Health and Human Services; 2005.
 
Centers for Medicare & Medicaid Services.  Medicare Demonstration Shows Hospital Quality of Care Improves with Payments Tied to Quality [Press release]. Washington, DC: U.S. Department of Health and Human Services; 2005.
 
Centers for Medicare & Medicaid Services.  Medicare Begins Performance-Based Payments for Physician Groups: New Demonstration Program Tests Financial Incentives for Improved Quality and Coordination in Large Group Practices [Press release]. Washington, DC: U.S. Department of Health and Human Services; 2005.
 
DeBrantes F, Galvin RS, Lee TH.  Bridges to excellence: building a business case for quality care. J Clin Outcomes Manag. 2003; 439-446.
 
Milstein A, Galvin RS, Delbanco SF, Salber P, Buck CR Jr.  Improving the safety of health care: the Leapfrog initiative. Eff Clin Pract. 2000; 3:313-6. PubMed
 
Galvin RS, Delbanco S, Milstein A, Belden G.  Has the leapfrog group had an impact on the health care market? Health Aff (Millwood). 2005; 24:228-33. PubMed
 
Enthoven A, Fuchs VR, Ginsburg PB, Starfield B.  Reforming America's Health Care System. Washington, DC: Human Resources Policy Association; 2006.
 
Mercer Human Resources Consulting.  Companies Unite in Care Focused Purchasing Initiative to Push US New Health Care Market [Press release]. New York: Mercer Human Resource Consulting; 25 March 2004.
 
The Ambulatory Care Quality Alliance.  Improving Clinical Quality and Consumer Decisionmaking. Background document. Rockville, MD: Agency for Healthcare Research and Quality. Assessed athttp://www.ahrq.gov/qual/aqaback.htmon 1 April 2006.
 
Choudhry NK, Fletcher RH, Soumerai SB.  Systematic review: the relationship between clinical experience and quality of health care. Ann Intern Med. 2005; 142:260-73. PubMed
 

Figures

Tables

References

Chernew ME, Hirth RA, Cutler DM.  Increased spending on health care: how much can the United States afford? Health Aff (Millwood). 2003; 22:15-25. PubMed
CrossRef
 
Rosenthal MB, Frank RG.  What is the empirical basis for paying for quality in health care? Med Care Res Rev. 2006; 63:135-57. PubMed
 
U.S. Department of Health and Human Services.  Public Health Service. Strategies to Support Quality-based Purchasing: A Review of the Evidence. Rockville, MD: Agency for Healthcare Research and Quality; 2004; 04-P024.
 
Doran T, Fullwood C, Gravelle H, Reeves D, Kontopantelis E, Hiroeh U. et al.  Pay-for-performance programs in family practices in the United Kingdom. N Engl J Med. 2006; 355:375-84. PubMed
 
Epstein AM.  Paying for performance in the United States and abroad [Editorial]. N Engl J Med. 2006; 355:406-8. PubMed
 
ABIM Foundation, ACP-ASIM Foundation, European Federation of Internal Medicine.  Medical professionalism in the new millennium: a physician charter. J Am Coll Surg. 2003; 196:113-4. PubMed
 
Association of Health Insurance Plans.  National Survey of Physicians Regarding Pay for Performance. Washington, DC: Association of Health Insurance Plans; 2004.
 
Rosenthal MB, Fernandopulle R, Song HR, Landon B.  Paying for quality: providers' incentives for quality improvement. Health Aff (Millwood). 2004; 23:127-41. PubMed
 
Glied S, Zivin JG.  How do doctors behave when some (but not all) of their patients are in managed care? J Health Econ. 2002; 21:337-53. PubMed
 
Institute of Medicare.  Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care. Washington, DC: National Academy Pr; 2002.
 
Rosenthal MB, Frank RG, Li Z, Epstein AM.  Early experience with pay-for-performance: from concept to practice. JAMA. 2005; 294:1788-93. PubMed
 
Birkmeyer NJ, Birkmeyer JD.  Strategies for improving surgical quality—should payers reward excellence or effort? N Engl J Med. 2006; 354:864-70. PubMed
 
Lee TH, Zapert K.  Do high-deductible health plans threaten quality of care? N Engl J Med. 2005; 353:1202-4. PubMed
 
Ignagni K.  Testimony on Examining Pay-for-Performance Measures and Other Trends in Employer-Sponsored Health Care before the U.S. House Committee on Education and the Workforce Subcommittee on Employer-Employee Relations. Washington, DC: U.S. House of Representatives; 17 May 2005.
 
Epstein AM.  Rolling down the runway: the challenges ahead for quality report cards. JAMA. 1998; 279:1691-6. PubMed
 
Lauer G.  California Pay-for-Performance Programs Draws National Attention. California Healthline. Oakland, CA: California Healthcare Foundation; 8 February 2006.
 
Aetna, Inc.  Aetna Expands Availability of Network Option Based on Clinical Performance and Cost [Press release]. Hartford, CT: Aetna, Inc; 2005.
 
Centers for Medicare & Medicaid Services.  Fact Sheet: Medicare Pay for Performance (P4P) Initiatives [Press release]. Washington, DC: U.S. Department of Health and Human Services; 2005.
 
Centers for Medicare & Medicaid Services.  Medicare Demonstration Shows Hospital Quality of Care Improves with Payments Tied to Quality [Press release]. Washington, DC: U.S. Department of Health and Human Services; 2005.
 
Centers for Medicare & Medicaid Services.  Medicare Begins Performance-Based Payments for Physician Groups: New Demonstration Program Tests Financial Incentives for Improved Quality and Coordination in Large Group Practices [Press release]. Washington, DC: U.S. Department of Health and Human Services; 2005.
 
DeBrantes F, Galvin RS, Lee TH.  Bridges to excellence: building a business case for quality care. J Clin Outcomes Manag. 2003; 439-446.
 
Milstein A, Galvin RS, Delbanco SF, Salber P, Buck CR Jr.  Improving the safety of health care: the Leapfrog initiative. Eff Clin Pract. 2000; 3:313-6. PubMed
 
Galvin RS, Delbanco S, Milstein A, Belden G.  Has the leapfrog group had an impact on the health care market? Health Aff (Millwood). 2005; 24:228-33. PubMed
 
Enthoven A, Fuchs VR, Ginsburg PB, Starfield B.  Reforming America's Health Care System. Washington, DC: Human Resources Policy Association; 2006.
 
Mercer Human Resources Consulting.  Companies Unite in Care Focused Purchasing Initiative to Push US New Health Care Market [Press release]. New York: Mercer Human Resource Consulting; 25 March 2004.
 
The Ambulatory Care Quality Alliance.  Improving Clinical Quality and Consumer Decisionmaking. Background document. Rockville, MD: Agency for Healthcare Research and Quality. Assessed athttp://www.ahrq.gov/qual/aqaback.htmon 1 April 2006.
 
Choudhry NK, Fletcher RH, Soumerai SB.  Systematic review: the relationship between clinical experience and quality of health care. Ann Intern Med. 2005; 142:260-73. PubMed
 

Letters

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Assumptions in P4P
Posted on November 10, 2006
Christine A. Sinsky
Medical Associates Clinic and Health Plan
Conflict of Interest: None Declared

Rowe (1) makes several important points about value based purchasing, especially the need to develop meaningful measures for complex patients and the tension between rewarding the absolute level of achievement vs the degree of improvement. Four assumptions within the paper, however, deserve comment: the assumption that HIT is the cure for quality; that extra patients aren't really extra work, that primary care physicians are not specialists, and that performance measurement should be focused at the physician level.

The author refers to the "obvious advantage" of an electronic health record (EHR) in achieving quality. I believe that to be a long-term probability, yet it is not a current reality for many who are using electronic health records. Existing products are too raw, the technology is too immature, and there is a serious lack of human factors and efficiency input into design. HIT has not yet lived up to its potential. In 2 years experience with an EHR at our clinic and 1 year with EHR and CPOE at our hospital I have seen quality compromised as a direct result of the technology.

Rowe claims that selective referral will increase physician income because "the income from these "˜extra' patients is mostly profit". Extra patients are extra work, and require additional physician and staff resources. They are not "mostly profit". There is a vein of magical thinking in medicine that implies physicians can do extra work in little or no extra time. (Everyone's pet project is added to the primary care specialist's slate of responsibilities with the offhand remark "it only takes a few more minutes to"¦") There are few economies of scale for personnel time, the most costly resource in an office practice. More patients per week mean more office hours per week, and more physician and staff time for pre-appointment, post-appointment, and inter-appointment management tasks.

General internists and family physicians are specialists in primary care. Our colleagues in cardiology, GI, ophthalmology etc. are single system specialists. It does not advance equity within the health care system to reinforce an outmoded hierarchy that implies greater value for one group of physicians over another ("specialist" implies "special"), particularly in the context of a discussion of physician reimbursement.

Rowe focuses primarily on performance measurement at the physician level. Since most quality is driven by systems at the organizational level, I believe the emphasis of measurement should also be at the systems level.

Conflict of Interest:

None declared

Pay for Performance / the Orwellian answer to cost control
Posted on November 15, 2006
Marcy Zwelling
no direct academic affiliation
Conflict of Interest: None Declared

I became a cynic early on when it came to the Golden Rule. My father's interpretation, "He who hath the gold, rules" seemed suitable in the world where I grew up. The emergence of Pay for Performance as illustrated by John Rowe, MD is the medical version of my dad's "Golden Rule".

Medicare in 1965 emerged and the patient-doctor relationship dissolved into the patient-fiduciary (health plan)-physician cooperative. As the cost of care increased (as one would only expect in any first dollar coverage system), the fiduciary, often a for-profit corporation, needed to cut expenses while increasing market share in order to maintain a profit margin.

HEDIS emerged but there was never any good evidence that "health care" was improved. Employers wanted their money's worth and pay for performance was born out of the physicians' need to emerge out of their bankrupting office practices and health plans' need to differentiate themselves from other plans in the same market place.

The problem is that there is no data to support the "performance". Healthcare data is scant at best and fails to legitimately document the "best" evidence for most every procedure or hospital occurrence.

Physicians have yet to evaluate what they "sell" and patients have no basis for a value-based purchase. In some circumstances, one medication may be better than another but the statistical basis is poor and few physicians ever take the time to articulate the statistical significance and its relevance to a specific patient centric plan of care during a health plan compensated 9 minute (on average) patient visit.

Pay for performance is a ruse. There is no additional money in the system to pay for "excellence" as defined by these arbitrary "what's good for one, is good for all" pradigms and many physicians will be forced out of business, making it more and more difficult for even the best doctors to have the time to listen and do the best for their patients.

The only way to credibly pay for any value based product is for the purchaser to pay for it directly not thru a third party that could not possibly know what is best for any specific circumstance.

My patients are individuals with specific medical and social needs to help them have "a better day". The purchase of a health care decision or product is nothing akin to the purchase of the best tasting cherry pie or an aged grade A piece of beef. I do not base my medical recommendations to my patients on how I will be rewarded excepting, of course, knowing the ultimate reward of knowing that that I did the right thing.

In a legitimate capitalist system driven by Keynesian economics, any purchaser must have full knowledge of the product and make a decision to purchase based on the value to him or her. On the other hand, population based/health plan driven health care decisions promoting a non-evidenced based pay for performance scheme is Orwellian and I believe best kept back in a library under the cover "1984".

Conflict of Interest:

None declared

P4P "“ Boon or Bane for the American patient?
Posted on November 20, 2006
Mahesh Krishnamurthy
Department of Internal Medicine, Easton Hospital, PA 18042
Conflict of Interest: None Declared

How much of the clinical outcomes are actually based on physicians care? This is the basic question we need to address before we discuss the pay-for performance (P4P) initiative. A well-designed study on managed care patients clearly indicated that patient factors substantially influenced outcomes. The cost of medications, age and sex of the patients were among many things that determined if patients decided to follow their doctors' advice (1). It is also well known that racial and ethnic disparities already exist in our healthcare system (2). Besides, it is suggested that adhering to current clinical guidelines in older adults with multiple co-morbidities may have undesirable effects (3). With this background, let us examine how the P4P program may affect some Americans.

Rowe (4) explicitly states in his article that the basic premise of the P4P initiative is that the physicians will respond to financial incentives and also voices his concern about practitioners trying to "game" the system in order to achieve these incentives. It is thus logical to presume that physicians would not want to deal with patients in their practices that are perceived as financially unrewarding. This group of patients unfortunately includes sick and elder Americans with complex medical disorders and the middle and lower income families. These individuals need healthcare the most and have difficulty achieving excellent health outcomes because of factors like rising health premiums, higher deductibles, less than optimum prescription coverage and poorer access to quality healthcare. Physicians typically spend more time to address their social situations, in addition to their medical problems. Often, cheaper and possibly less effective alternatives have to be tried for these patients, thus precluding the desired best clinical outcomes. With the P4P program, there would be even less incentive for physicians to care for these patients. Our healthcare system cannot risk making access to quality healthcare more difficult for some, while achieving overall better outcomes in others.

We clearly need more value for our healthcare dollar and a well- implemented P4P program will be a good start. But, public health policy makers should understand that while it is a laudable goal to achieve cost effective and quality healthcare, it should not be done at the cost of isolating certain subgroups of the population from procuring that quality product. The P4P program should not be thrust too quickly on the medical community without consideration of these potentially undesirable consequences. Rather, it should be a collaborative effort after careful discussions with practicing physicians, organizations like the American Association of Retired People (AARP) and minority group representatives.

References

1. Schultz JS, O'Donnell JC, McDonough KL, Sasane R, Meyer J: Determinants of compliance with statin therapy and low-density lipoprotein cholesterol goal attainment in a managed care population. Am J Manag Care. 2005 May; 11(5): 306-12. [PMID: 15898219]

2. Betancourt JR, King RK: Unequal treatment: the Institute of Medicine report and its public health implications. Public Health Rep. 2003 Jul-Aug; 118(4): 287-92. [PMID: 12815075]

3. 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. 2005 Aug 10; 294(6): 716-24 [PMID: 16091574]

4. Rowe JW : Pay-for-performance and accountability: related themes in improving health care. Ann Intern Med. 2006 Nov 7; 145(9): 695-9. [PMID: 17088584]

Conflict of Interest:

None declared

In Response
Posted on November 28, 2006
Christine K. Cassel
ABIM
Conflict of Interest: None Declared

To the Editor:

ABIM is pleased that the Kimball lecture given at the 2005 ABIM Foundation Forum was published. It is an annual lecture in honor of Harry Kimball (not "Harvey" as stated in the acknowledgments), ABIM and ABIM Foundation CEO from 1990-2003.

It is also important to point out that Dr. Rowe is incorrect in his statement that Maintenance of Certification (MOC) does not measure quality frequently enough to be relevant to pay-for-performance programs. To the contrary, in the past year several major regional and national health plans"”including Dr. Rowe's former company, Aetna; but also UnitedHealthcare, and Blue Cross and Blue Shield plans in Nebraska, New Jersey (Horizon), and Pennsylvania (both Highmark and Independence)"”have recognized the relevance of board certification and recertification by incorporating them in their reward and recognition programs , and many more appear poised to do so. It is particularly important to note that "the utility of these professional databases" has not "been limited because"¦some certification programs measure performance at 10-year intervals." In fact, these health plan programs reward physicians who measure performance annually or every-other-year, through the MOC process.

While the total cycle is ten years, Maintenance of Certification in any of the ABMS specialties is intended to become a series of assessment activities over the course of the ten-year cycle. The alignment of health plan incentives with professionally led efforts to measure and improve care can significantly reduce the burden associated with collecting data for both purposes. ABIM is committed to making the measurement associated with MOC both timely and clinically relevant.

Christine K. Cassel, MD, MACP President and CEO, American Board of Internal Medicine

References

1.Rowe JR. Pay-for-Performance and Accountability: Related Themes in Improving Health Care. Ann Intern Med 2006;145:695-699.

2.American Board of Internal Medicine. Health Insurers Work With American Board of Internal Medicine (ABIM) to Reduce Physician Quality Data Reporting Burden. Press release issued June 28, 2006. http://www.abim.org/pressroom/pres_release/06_06_28_burden.shtm (accessed November 6, 2006).

Conflict of Interest:

None declared

Response of Dr. John Rowe to Letters to the Editor
Posted on February 8, 2007
John W. Rowe
Columbia University
Conflict of Interest: None Declared

In response to Dr. Cassel:

In my paper, I indicated that the recertification databases developed by certifying boards may be of limited utility for P4P programs "because some certifying programs measure performance at 10-year intervals". I appreciate Dr. Cassel's note that the American Board of Internal Medicine's Maintenance of Certification program affords physicians the opportunity to assess their clinical performance regularly throughout a ten-year recertification period. If the recent trend for health plans to recognize these assessments in their reward programs spreads more widely and many more physicians participate, my skepticism in this regard may prove unfounded.

In response to Dr. Sinsky:

I concur with Dr. Sinsky's view regarding the gulf between promise and practice in HIT. However, some organizations, such as the Veterans Administration and Montefiore Medical Center in New York, have made real progress. Dr. Sinsky questions my focus on individual physicians, because quality is often driven at the systems or organizational level. Since most U.S. physicians practice in solo or very small groups, a primary focus on the clinical performance of individual physicians is warranted.

Dr. Sinsky disagrees with my view that referring additional patients to specialists, such as orthopedists and cardiac surgeons, will increase physician income disproportionately. While these patients require as many resources as others, my experience as CEO of a large medical center leads me to conclude that extra "marginal" patients add significant financial value once the fixed costs of operating the practice have been covered.

In response to Dr. Krishnamurthy:

I concur with Dr. Krishnamurthy regarding the critical importance of patient factors in the effectiveness of P4P efforts. Physicians must not be penalized for performance measures that are determined more by characteristics of the patients they choose to serve than their efforts.

In response to Dr. Zwelling:

I agree with Dr. Zwelling on the need for more evidence to support the establishment of standards, against which the clinical performance of physicians is measured. A glaring deficiency is the lack of suitable information on the comparative effectiveness of various medications, devices, and procedures. The relevant clinical data base is growing rapidly and we should use the information currently available rather than waiting for perfection of the evidence.

I do not agree that the lack of additional money makes P4P a ruse. Where in the logic for P4P is the promise of increased overall payments for physicians? As I indicated in my paper, P4P is, ultimately, about paying higher-performing physicians more and lower-performing physicians less.

Conflict of Interest:

None declared

Pay for performance:final pathway to dehumanization of doctors
Posted on June 6, 2007
Edward J. Volpintesta
No Affiliation
Conflict of Interest: None Declared

Perhaps the most important statement made by the author was the very last one in his article: "It is hoped that the payment system will learn to reward the personal qualities that patients continue to seek in their physicians". The significance and implications of this statement are monumental and not nearly discussed enough. Physicians are living in an era in which science has come to dominate and define every area of what they do. It has become so strong, or perhaps headstrong is a better word, that it has pushed aside the humanistic qualities of medicine that should separate it from all other professions. Doctors are rapidly losing their traditional roles as "doctors", that is, caring, concerned idividuals that make decsions based on common sense. This has been made worse of course by the legal imperative to do everything to prevent malpractice suits. Still it could have evolved differently had the medical leadership spoke out and defended the humanitarian roots of the profession.

Things worsened when medicine adopted the language of the workplace: concepts like productivity, quality,and pay-for-performance are all better suited for making radios and digital cameras. They have little or no application to human beings as patients. But now that they have achieved currency we are forced to use them. But if we do,lets at least be aware of the potential for harm that they carry.

What is that harm? Well by classifying doctors in such harsh and impersonal terms, there is a danger that doctors' sense of identity will be defined not by medicine's traditional qualtities but by the business world's profit-driven philosophy. And as physicians increasingly are working for either large medical groups,hospitals, and HMOs the opportunity and pressure to rationalize will only increase.

Doctors will come to see theselves as scientists-businessmen, having rationalized away all the soft qualities as being exraneous and meaningless. The profession will have been cleansed of its humnanitarian roots. Its already started.

The time is now to protect those personal qualites that bond physicians and patients:to identify them, reward them, and make them just as commendable and worthy of admiration as any other standards used to evaluate physicians.

Conflict of Interest:

None declared

Remedial education must always be positive and constructive
Posted on June 6, 2007
Edward J. Volpintesta
No Affiliation
Conflict of Interest: None Declared

The author mentions that those physicians who have been in practice a long time have worse average scores on measures of quality and may be "targets' of remedial educational initiatives.

Remedial education is a good idea. Most of us do it voluntarily by reading and attending CME. But a little extra never hurts as long as its practical and tailored to one's practice.

Thus the educational initiatives the author alluded to have to be carefully thought out. They should not have any of the flaws of the ABMS recertification exams as they apply specifically to primary care doctors. Many of these physicians as time goes on tailor their practices to their capabilities, the needs of the community, the number of specialists in the area, and the revalent socieconomic standard.

Yet their recertification boards reflect a dogmatic approach. One that represents the ideal internist or family doctor. Fearful of not passing, some doctors force-feed themselves by taking board review courses memorizing material that they no longer need. Clearly, it is impractical and unrealistic to expect all physicians, particularly those in primary care to have the wide spectrum of academic knowledge they had at the end of their residencies or during the first few years of their practices.

In addition, the boards have a pass/fail approach which really is an insult to any physician who has been through an approved residency and passed a primary certification and kept his CME up to date. Failing a test that is ineffective in the first place and retaking it at much cost of time and money is an indication of how fragmented the profession has become and how much a common ideology is lacking.

The point is that any remedial education offered should point out areas of weakness to doctors and provide opportunities to improve. They should be constructive and positive. After all, doctors have spent a large part of their lives and made many sacrifices to get licensed. Its wrong for any board or certifying organization to use education to harm either a physicians' reputation or ability to make a living by "failing" him or her.

Impractiality and potential to harm physicians should never be a part of physicians' remedial exams.

Conflict of Interest:

None declared

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