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					The Benefits and Burdens of
   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
           dsatin@umphysicians.umn.edu
             Following this session,
           participants will be able to:

1. Describe how a pay for performance (P4P) model
   of physician reimbursement functions.

2. Cite 4 economic, clinical, social, and moral benefits
   and 8 burdens likely to result from P4P.

3. Summarize the evidence of P4P’s efficacy and
   adverse effects.
       Objective #1


Describe how a P4P model
of physician reimbursement
functions.
            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
                      4th Annual Disease Management Outcomes Summit
                      Johns Hopkins / American Healthways, Nov. 2004
                                   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 http://www.cmwf.org/publications_show.htm?doc_id=274106
             Quality goals may be in areas of:


     1. Structure: e.g. Having an electronic medical
        record

     2. Process: e.g. Adherence to professional
        guidelines such as checking a hemoglobin A1c
        every 3 months in patients with DM2

     3. 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
             Quality goals may be in areas of:


     1. Structure: e.g. Having an electronic medical
        record

     2. Process: e.g. Adherence to professional
        guidelines such as checking a hemoglobin A1c
        every 3 months in patients with DM2

     3. 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
                               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 personal improvement over last year’s results.
     •      Some restrict their P4P criteria to patients with their insurance.



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.
                                         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.
                                         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.
                            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):2694-2702, 2006 Dec 13.
The Charitable Interpretation of P4P


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


P4P enables third party payers
  to control costs by bribing
      physicians to follow
 prescribed practice patterns.
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?
      Objective #2


Cite 4 economic, clinical,
social, and moral benefits
and 8 burdens likely to
result from P4P.
                         DISCLAIMER!

All forms of physician reimbursement
(fee-for-service, capitation, salary…)
have benefits and burdens to
patients, physicians, third party
payers, and society.


4. Goold, S. Trust and Physician Payment. Healthcare Executive, July/Aug 1998
1. 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 support staff
                Implementing an EMR
                Patient education
                Developing a therapeutic relationship

* Charitable interpretation of P4P – contrast with skeptical interpretation in Selected BURDENS of P4P
2. Aligns goals of clinical care with payment


       • Quantity ought not be the only
         determinant of reimbursement.

       • P4P derives some of the benefits
         of capitation.
    3. 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.



5. Crossing the Quality Chasm: The IOM Health Care Quality Initiative. http://www.iom.edu/CMS/8089.aspx
4. Healthier
patients can
be cared for
more cheaply
and are more
productive
P4P Potential BENEFITS Summary


1. Finances quality improvement projects
2. Aligns goals of care with payment
3. Encourages more standardized care
4. Healthy patients = health care savings
    1. Quality data collection is burdensome

     E.g. Review of ‘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.
2. 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.
3. May Erode medical professionalism.

         •      What 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 self regulation (underuse vs overuse
                measures).*


†   Taking-it-too-personally interpretation 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
* Skeptical interpretation of P4P - contrast with charitable interpretation in Selected BENEFITS of P4P
4. 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
           continuously hassle them 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.
      5. May discourage clinical judgment

      •    Current American P4P programs typically do not
           allow for exceptions.

      •    Intersecting guidelines can be dangerous.12

      •    When faced with exceptional patients, clinicians must
           have the moral fortitude to exercise clinical judgment
           despite P4P.13



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.
13. Satin DJ. Miles J. Practice Incentives and Professional Responsibility. AMA Virtual Mentor,
      November 2008. http://virtualmentor.ama-assn.org/2008/11/ccas1-0811.html
   6. Sicker patients may get worse care

     •     Sicker patients have more limited access when clinicians
           are rewarded for healthier patients under P4P.14

     •     Special programs for Diabetics with A1C close to goal (7-
           8), but nothing for patients with A1C far from goal (>10).

     •     Risks of Diabetic complications rise exponentially with a
           rise in A1C.15,16



14. Shen Y. Selection incentives in a performance-based contracting system. Health Serv. Res. 2003;38:535-52
15. United Kingdom Prospective Diabetes Study. (UKPDS) http://www.dtu.ox.ac.uk/index.html?maindoc=/ukpds/
16. Diabetes Control and Complications Trial (DCCT). http://diabetes.niddk.nih.gov/dm/pubs/control/
     7. May increase health care disparities


     • Rural, minority, and poor patients all have, on
       average, worse outcomes.17

     • These patients may be excluded from practices.

     • Clinics serving a higher proportion of these patients
       will be financially disadvantaged.18



17. 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): 981-92, 2000.
18. Satin, DJ. Paying Physicians and Protecting the Poor. Minnesota Medicine, Apr. 2006, p42-44
  8. May slow integration of new evidence


  “Major Diabetes Trial Halted After Deaths”




19. Satin D, Miles J. ACCORD, ADVANCE, and P4P: The Data-Driven Future of Quality Improvement.
          Minnesota Physician, March, 2009.
P4P Potential BURDEN Summary
1. Quality data collection is burdensome
2. Up front investment is large and risky
3. May erode medical professionalism
4. Altered physician-patient relationship
5. May discourage clinical judgment
6. Sicker patients may get worse care
7. May increase health care disparities
8. May slow integration of new evidence
       Objective #3


Summarize the evidence of
P4P’s efficacy and safety.
              A Word About the Evidence

      Over the past 3 years, there has been an
       explosion of data demonstrating the intermediate
       level success of P4P programs.20,21

      Public reporting of data appears to have an
       additive effect on improvement in outcomes.22


20. Rosenthal MB, Frank RG, Li Z, Epstein AM. Early experience with pay-for-performance: from concept
       to practice. JAMA 2005;294:1788–1792.
21. 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):265-272
22. Rowe JW. Pay-for-performance and accountability: related themes in improving health care. Annals of
       Internal Medicine. 145(9):695-9, 2006 Nov 7.
             A Word About the Evidence

      More clinically significant hospital-based
       outcomes such as death from pneumonia, CHF,
       and MI have not been clearly demonstrated.23

      There remains little data addressing the potential
       adverse effects of P4P.24,21


23. Werner RM, Bradlow ET. Relationship between Medicare’s hospital compare performance measures
       and mortality rates. JAMA. 296(22):2694-2702, 2006 Dec 13.
24. Rosenthal MB. Dudley RA. Pay-for-performance: will the latest payment trend improve care? JAMA.
       297(7):740-4, 2007 Feb 21.
21. 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):265-272
                Conclusions

 P4P in the United States is heterogeneous.

 P4P can improve intermediate level outcomes.

 It is unclear whether P4P will improve overall
  morbidity and all cause mortality.
                Conclusions

 There will be costs for the success of P4P.

 Demonstrating the adverse effects of P4P is
  more difficult than demonstrating its positive
  effects.
             Following this session,
           participants will be able to:

1. Describe how a pay for performance (P4P) model
   of physician reimbursement functions.

2. Cite 4 economic, clinical, social, and moral benefits
   and 8 burdens likely to result from P4P.

3. Summarize the evidence of P4P’s efficacy and
   adverse effects.
               Starter References

1.   Outcomes-Based Compensation: Pay-For-Performance Design
     Principles, 4th Annual Disease Management Outcomes Summit,
     Johns Hopkins / American Healthways, Nov. 2004.

2.   American Academy of Family Physicians (AAFP) P4P Guidelines.
     http://www.aafp.org/x30307.xml?printxml Accessed 8/29/2005.

3.   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):265-272

4.   Rosenthal MB. Dudley RA. Pay-for-performance: will the latest
     payment trend improve care? JAMA. 297(7):740-4, 2007 Feb 21.
      Bonus Objective


Compare and contrast P4P in
the United States and abroad.
                   How is P4P done overseas?
                  The UK National Health System

        National system
        Notable differences between systems:
     •      Homogenous system
     •      Average General Practitioner’s bonus in 2004 was 25% of fee-for-
            service reimbursements and as much as 50%
     •      Adjusts performance goals for economic status of patient
            population
     •      Allows for particular exceptions for patients unable to meet goals


Rowe JW. Pay-for-Performance and Accountability: Related Themes in Improving Health Care. Annals of
      Internal Medicine. 145;9:695-9. Nov. 7 2006.
Personal interviews Sept 2005: Shah, W. South London Family Practice, England, & Gillis, J. Scotland FP.
                 How is P4P done overseas?
               New Zealand’s Regional Systems

        National healthcare implemented by regions

        Notable differences between systems:
     •     Heterogeneous system of grant-style quality improvement
           initiatives

     •     Adjusts performance goals for aboriginal status of patient
           population

     •     Allows for particular exceptions for patients unable to meet
           goals


Personal interviews Sept 2005: Townsend, T. New Zealand Family Practice
               How is P4P done overseas?
          Australia’s Practice Incentives Program

        National program

        Notable differences between systems:
     •      Includes access measures

     •      Uses a tiered system of bonuses

     •      Average immunization bonus per practice in 2006 was $997.84

     •      Goal adjustments for age and gender mix. No exceptions

     •      Promotes case finding (e.g. Pap smear bonus for new or >5yrs)


http://www.medicareaustralia.gov.au/providers/incentives
Email cor. 4/07: Michelle Sweidan, Pharmaceutical Decision Support, National Prescribing Service Ltd.
                   How is P4P done in
              the United States of America?

       Over 150 individual programs with a national
        program that currently rewards for reporting only.

       Notable differences between systems:
    •     Public reporting of data increasing in popularity

    •     Focus on all or nothing “Grand Slam” measures

    •     Private insurance corporations determine their
          measures

    •     Typically no goal adjustments or patient exceptions

				
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