Some say pay for performance (P4P) initiatives can lead to improved processes, less mistakes, reduced costs and a higher standard of quality care. Others express concern about obstacles to implementing such a program and a potential for personalized care to take a backseat to more algorithm-driven processes. With this in mind, here is a closer look at the potential advantages and pitfalls of P4P in health care.

No one denies the benefit of striving toward improved quality and safety with patient care. Pay for performance (P4P) programs offer health care providers incentives tied to different measures and outcomes of patient care. Some cite the promise of these initiatives, saying more formalized processes could reduce the risk of medical errors, lower the risk of costly complications, increase efficiency and facilitate earlier intervention for patients when necessary.

A reliable system to help healthcare providers do all the right things the right way at the right time helps avoid costly complications,” explains Dr. Casale.

However, P4P programs have their share of detractors as well. Some fear these programs could shift care to even more of a bottom-line mentality in which clinicians may be reluctant to care for patients with chronic conditions or those who are non-compliant. Others see a potential shift to more of a “cookbook” approach to medicine in which strong adherence to processes supersedes personalized care for the individual patient.

Regardless of the apprehension in some camps and the potential obstacles, P4P programs appear to be gaining a more prominent foothold in health care. In July, the Centers For Medicare and Medicaid Services (CMS) unveiled the Physician Quality Reporting Initiative (PQRI). Under this voluntary program, health care providers (including doctors of medicine, physician assistants and nurse practitioners among other providers) who report quality measures they take on claims during the July 1-December 31 time period “may earn a bonus payment, subject to a cap, of 1.5 percent of total allowed charges for covered Medicare physician fee schedule services,” according to CMS.

With these developments in mind, we talked to a variety of clinicians and health care consultants to get their perspectives on the potential impact of P4P initiatives in health care.

Defining The Key Aspects Of Pay For Performance
According to Peggy McNamara, MSPH, P4P represents an approach to improve a clinical care system through financial incentives. These incentives reward clinicians for efficiency, quality and safety in patient care. In particular, quality measures may be tied into patient satisfaction, processes of care (i.e. compliance with clinical guidelines), outcomes (such as lower mortality after surgery), and structural benchmarks such as technology investments.

“While quality-based payment is not a panacea, it is one of a number of approaches that might be pursued as part of an overarching strategy to improve quality,” notes McNamara, a Senior Analyst of the Center for Delivery, Organization and Markets at the Agency for Healthcare Research and Quality in Rockville, Md.

Caroline Fife, MD, says there are essential cornerstones for developing P4P but, alas, the devil is in the details with such a multi-layered initiative.

“The formula to make (P4P) work is technically pretty simple in a staggeringly hard way,” says Dr. Fife, the Director of Clinical Research at the Memorial Hermann Center for Wound Healing and Hyperbaric Medicine at the University of Texas Medical School at Houston.

According to Dr. Fife, the plan requires:
* consensus agreement on minimum standards of care;
* a method to consistently remind doctors or clinicians to adhere to these standards;
* methods of gauging adherence to those standards; and
* a way to document and communicate performance to monitoring agencies such as the Centers for Medicare and Medicaid Services (CMS).

In order for P4P incentives to work, Alfred Casale, MD, says health care providers need to be involved in the development of such a program.

“The physician needs to be involved with the development process, including the review, discussion and adoption of the ‘best practice’ evidence,” maintains Dr. Casale, the Director of Cardiothoracic Surgery at Geisinger Medical Center in Danville, PA. In regard to the design process, Dr. Casale says the “entire care team” should be involved.

Geisinger Medical Center has implemented a system for treating patients who are undergoing coronary-artery bypass grafting (CABG). Dr. Casale says the ProvenCare CABG program is based upon 40 best practice steps that hold various team members accountable. The “simplicity and clarity” of such a model can help facilitate improved care and reduced costs, according to Dr. Casale.

“A reliable system to help healthcare providers do all the right things the right way at the right time helps avoid costly complications,” explains Dr. Casale.

Why Is There A Push For P4P Initiatives?
Perhaps the time has come for P4P programs that seek to improve quality care. There is a sense that quality care measures are lagging, notes Rachel Pentin-Maki, RN, MHA, the Chief Operating Officer of the Institute of Medical Business Advisors (IMBA) in Norcross, Ga. She says one recent study found that less than a third of internists polled felt that current quality measures were adequate and slightly more than a third of the internists polled believed that private health insurers and the government would try to make such measures accurate.

There are also lingering issues with reimbursement for services provided to Medicare patients. Citing reported figures from the Congressional Budget Office for the period of 1997 to 2005, David E. Marcinko, MBA, CMP, points out that Medicare’s payment rates for services actually declined when they were adjusted for inflation.

“This means that the spending hike resulted from a boost in volume and intensity of physician services, not an increase in the amount doctors received for each service,” claims Dr. Marcinko, the Chief Executive Officer of IMBA.

Without some sort of alternate strategy to the current Sustainable Growth Rate Formula (SGRF), Dr. Marcinko says Medicare payments to physicians are expected to drop nearly 10 percent in 2008.

Dr. Casale has noticed something else in regard to diagnostic-related group (DRG) reimbursement in hospital settings.
“Under the (DRG) reimbursement system that Medicare and most insurers currently use for hospitals, the hospital can actually be paid more for cases that have complications,” points out Dr. Casale.

Emphasizing The Need For Checks And Balances, And Specialty-Specific Guidelines
Yet there are concerns that a more algorithm-driven approach to care, public disclosure of care quality and incentives may have certain consequences for patient care.

There is the potential that clinicians in certain systems could shy away from more difficult patients to increase the potential of receiving incentives, according to Meredith Rosenthal, PhD, an Associate Professor of Health Economics and Public Policy at Harvard University’s School of Public Health. Hope R. Hetico, RN, MHA, CMP, has heard similar concerns.

“Physicians also worry that P4P and public reporting programs might cause some to shun sick, poor or non-compliant patients, and to neglect unmeasured but equally important areas of quality,” points out Hetico, the President of IMBA.

Dr. Casale says any plan requires appropriate checks and balances to help ensure the effectiveness of the plan. Pentin-Maki agrees that “credible evaluation and reporting” leads to a more effective plan.

To that end, Dr. Fife does not see P4P working in hospital settings without computerized documentation. She says this would be difficult without significant technology upgrades. In her opinion, many hospitals presently utilize computer programs that are thorough but mediocre. She says in specialty P4P settings, someone with knowledge of that specific specialty would have to create the software to make it work most effectively.

Melesia R. Tillman, CPC, CCP, agrees that specialty specific guidelines are essential in order for P4P to work.
“There should be separate regulations or guidelines for specialty practices,” adds Tillman, a Coding and Reimbursement Specialist in the Department of Socioeconomic and Government Affairs at the American College of Rheumatology. “Whoever forms the guidelines for P4P should be informed in the given specialty.”

Hetico says P4P (guidelines or regulations) should be “risk, age and demographically adjusted as well as specialty specific to the best extent possible.”

Where Does Evidence-Based Medicine Enter The Equation?
Dr. Marcinko says a “sea change” is necessary in the current reimbursement paradigm to align P4P and evidence-based medicine (EBM). Some specialties may currently be better suited for P4P initiatives as a result of having more evidence-based guidelines available, according to Dr. Rosenthal.

“Primary care, cardiology and a few other medical specialties are better candidates because there is more evidence-based medicine (EBM),” notes Dr. Rosenthal. “It may be that some specialties will have a hard time developing valid measures and this makes P4P more challenging, particularly if the most important outcomes are long-term outcomes.”

Dr. Rosenthal adds that she is seeing “a major rush” of EBM measures for a wide range of specialties through the physician consortium of the American Medical Association among others. Dr. Fife concurs. She says many physicians are evaluating the national treatment guidelines in their specialties and “that is a very useful process from which patients can only benefit.”

“I do not know of any specialty that is not working on national guidelines for one thing or another,” notes Dr. Fife.
However, Dr. Fife cautions that one cannot over-rely upon EBM when it comes to P4P initiatives. In the wound care realm, “less than 20 percent of what we do for patients is supported by a randomized controlled trial (RCT),” estimates Dr. Fife. She says RCTs in wound care “poorly represent the patient population we see because they exclude people with vascular disease, renal failure, steroid dependency and out of control diabetes, just to name a few of the conditions which most of our patients have.”

Dr. Fife says P4P initiatives should focus on ratcheting up the level of basic care. For example, have patients with diabetes received an annual eye exam? Are women of a certain age getting mammograms? Did people with pneumonia receive antibiotics within a certain period of time after hospitalization and did they get the right ones? She says more clinicians need to be asking these questions when appropriate.

“What we are lacking in the United States is consistent basic care,” opines Dr. Fife. “We rank below a lot of second-world countries in that regard.”

How Geisinger Medical Center Has Made P4P Programs Work
Perhaps above and beyond the scope of what it takes to implement and maintain a successful pay for performance plan is proof of a successful plan in action. Learning from the trials and tribulations of those who have instituted P4P programs may help facilitate the development of P4P initiatives in other facilities and specialty practices.

Dr. Casale and Karen McKinley, RN, the Vice President for Clinical Effectiveness at Geisinger Medical Center, say the center’s P4P system facilitates cost-effectiveness and improved outcomes.

“We are showing a decrease in hospital stays,” says Dr. Casale. “Our experience with our P4P initiatives is that rewarding providers who perform care without complications makes sense.”

Since the beginning of Geisinger Medical Center’s breach into P4P, the center has implemented three P4P plans in elective total hip replacement, cataract surgery and percutaneous intervention. The center expects to implement six more P4P plans within the next year, according to McKinley.

McKinley says they began their plans by focusing by and large on procedures that are important for patient safety and procedures critical to executing evidence-based criteria. Once they have identified these key procedures, McKinley says they build in redundancies “to make sure these critical processes happen without fail.”

Of course, venturing into fairly unknown territory does have its snags, notes Dr. Casale. Many of his colleagues were skeptical at first, fearing that over-programming of the processes would eliminate the “prerogatives that allowed them to personalize care,” according to Dr. Casale. However, once they realized the structure aided decision-making and ensured that every step was followed, Dr. Casale says “they were onboard.”

“As with any new process, the early stages can be a little rough,” recalls McKinley. “People can get their hackles up from time to time but overall, it has been a good experience.”

McKinley explains that one key to success has been investing physicians in the plan from the beginning. Being engaged in the entire process lends itself toward being motivated toward the initiative’s success. In regard to the ProvenCare CABG program, McKinley says
Geinsinger cardiac surgeons were involved in reviewing, discussing and adopting the best practice evidence foundation for the P4P initiative.

Those same clinicians actively address parts of plans that hit snags, according to Dr. Casale. He says they collect the data around the critical process as close to real time as possible. In cases in which a part of a plan is deemed inefficient, Dr. Casale says the clinicians redesign, test and integrate that portion of the process back into the plan.

“It is important to understand that at no time is the patient put at risk,” assures Dr. Casale. “By abstracting data in this manner, we keep our finger on the pulse of the process. It is important to constantly measure those things that are critical to patient outcomes.”

Can P4P Initiatives Reduce Costs And Improve Patient Care?
Do P4P programs help facilitate positive outcomes in patient treatment? Dr. Casale says the Geisinger Health System has also had great success with bundling of services for patients with diabetes. Yet McNamara and Dr. Rosenthal say the results of P4P programs have been “mixed” in the literature. According to Dr. Marcinko, preliminary results of a three-year CMS P4P demonstration project showed improved care in the first year but notes only two out of the ten large physician practices earned bonus payments.

Dr. Marcinko has a bit more trepidation about P4P initiatives.

“(Pay for performance) has the potential to become abused, discriminatory and ultimately drilled down to a highly monitored algorithm-driven ‘cookbook medicine’ type system,” warns Dr. Marcinko.

McNamara disagrees. She says overuse in regard to quality care processes would only benefit the system.
“To the extent the quality benchmark being targeted in a quality-based payment scheme is a measure of overuse, it would potentially have a positive impact on both quality and cost,” claims McNamara.

Despite the technical hurdles, Dr. Fife thinks that P4P programs could make health care systems more cost-effective and facilitate better care by prompting more effective early intervention.

“I am not sure what percentage of health care dollars is wasted due to a lack of basic interventions early but I see it in my practice every day,” says Dr. Fife.

Tillman believes there can be a “happy medium” with P4P programs when it comes to reining in costs and improving patient care. She agrees with Dr. Casale that clinician involvement is paramount as other “quality” initiatives in the past have focused too much on bottom-line concerns instead of patient care.

“(Clinicians) have been told far too often that they should be part of a ‘quality program’ only to find out later they are punished if they do not conform,” notes Tillman. “In some cases, the quality program does not benefit the patient’s care.”

Dr. Fife and Hetico acknowledge there are philosophical hurdles to overcome as well when it comes to buying into the concept of P4P.

“The pay for performance concept has not been socially accepted — carte blanche — by the current domestic health system of payer, patients and providers,” exclaims Hetico.

Hetico explains that accepting pay for performance implies acknowledging the possibility that some providers may render better, different or inferior care than others and some payers may compensate for better, different or worse care than others.

“As an egalitarian society, we may not be prepared for this moral distinction,” notes Hetico.

While Dr. Rosenthal acknowledges the potential hurdles and apprehension, she says the emerging consensus sees an upside to P4P initiatives that is worth exploring.

“Of course pay for performance faces many obstacles — incentives to dump patients, gaming, forcing excessive focus on measured quality to the detriment of hard to measure but important aspects of care,” says Dr. Rosenthal. “The question is whether it will do more good than harm. At the moment, everyone is proceeding as if the answer to that question is yes.”