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Pay-for-Performance: The Good, The Bad and The Ugly

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The concept of Pay-for-Performance (P4P) has a mixed reputation in the provider community. The vigorous efforts of the Federal government to adopt it in Medicare are causing a lot of friction.

What are the real issues here and what could be the solutions?

Without a question, the frustration of employers, government and general public with rising healthcare costs has reached a boiling point. Few people would argue that our system has few controls to reduce over-utilization, which does not necessary lead to better outcomes: "More Treatment Does Not Improve Care for Chronically Ill, Study Finds".

Of course one man's cost is another man's revenue.

The question is who gets to have this revenue and why. Our pay-by-volume system pays all providers equally. Many would like to keep it this way. But a growing number of physician organizations is starting to recognize that the best way to run a successful practice is to increase quality and demand increased reimbursement.

With this in mind, what are the choices in P4P-land?

THE GOOD: P4P programs driven by providers and designed based on realistic ability to implement. An example is the asthma care program of Children’s Mercy Hospital and Clinics in Kansas City, MO. According to Mercy's Laura Benko "we will be replacing sick dollars with well dollars” (Modern Healthcare, p. 6-7, November 28, 2005).

THE BAD: Providers not taking a lead means leaving the health plans, government and employers in charge. With frustrations over our system as high as they are, derailing the momentum of P4P movement is easier said than done. Consequently, being left out would mean having to deal with unpalatable changes forced down provider's throats.

THE UGLY: That is what we have right now. Costs are rising, quality is not rewarded and what is the only outlet for grievances? That is right, malpractice lawsuits that usually turn ugly, indeed. So now, instead of a continous and predictable P4P scale, doctors are judged as either 100% qualified or 100% criminal. This is not fair to anybody.

Defining "the good" P4P systems will take time. The best way for physicians to safeguard their interests is to take a lead.

UPDATE #1: Health Care Law Blog tells us just how ugly, THE UGLY can get. Kevin MD says med-mal "punishes bad luck and negligence the same way", taking tremendous toll even if you are absolved.

UPDATE #2: Jacob Reider highlights another physician organization that "gets it": National Physicians' Alliance.

UPDATE #3: P4P Series, Part 2: Responding to common P4P criticism: "Pay-for-Performance: Faults in Concept or Implementation?"

UPDATE #4: P4P Series, Part 3: Highlighting THE GOOD adopters: "American College of Physicians Proposes a Reasonable Approach".

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Comments (1)

#1: P4P
Submitted by Dr. Rob Lamberts on Thu, 01/05/2006 - 2:02pm.

The reason others are in charge of P4P is that they are the only ones with information.  Insurance companies became leaders in "managed care" in the past and P4P now because they were the only ones with information about physician behavior (through claims data) and a means of influencing physician behavior (money).  For physicians to become players in the P4P game, they need to gather their own information.  I recently got a claims-data report from one of the insurance companies I do business with.  I found that over half of their information was inaccurate, so I sent them a report card of their report card.  Since we have a very good information system, we can not only know what our quality is, we can influence quality at the point of care.  This is why the essential first step for healthcare reform is to get physicians to adopt information systems.  This is part of the reasoning behind the DOQ-IT project.

The fact that many find the idea of P4P distasteful is a sad comment on the state of healthcare.  Surely, they can't say that it is OK to maintain a system that encourages bad care over good care (through reimbursment based on volume rather than quality).  The basic problem physicians have with P4P is that they don't trust the motives of those who are pushing it.  Who can blame them?  These often are others with a big finger in the very large pie of healthcare spending and large dose of self-interest. 

Yet, to blast the concept of P4P because you don't trust those who would push it is to make a big mistake.  It is obvious that good medicine deserves to be paid more than bad medicine.  The goal is to create an environment in which this can really happen.  Those who stand to gain the most in this arena are physicians, patients, and employers.  They are the best ones to shape what is to come.  Physicians need to embrace the idea of P4P by jumping on the IT bandwagon, realizing that  "information is power," and we posess the ability now to have far better information than we have ever had before.

Robert Lamberts

Evans Medical Group

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