Current Pay-for-Performance Programs More Focused on Cost and Care Outcomes

Building on their earlier assessment of emerging "pay-for-performance" efforts, Meredith Rosenthal and colleagues at Harvard School of Public Health and Harvard Medical School report in the November/December issue of Health Affairs that the earliest adopters of "pay-for-performance" are sticking with it, focusing on ways to refine it as a tool to reward physicians and hospitals for providing good patient care: Climbing Up the Pay-For-Performance Learning Curve: Where Are the Early Adopters Now?

The team surveyed twenty-seven early adopters of P4P to compare how their payment reward systems evolved between 2003 and 2006. They found that performance measures used to evaluate and reward physicians and hospitals in 2003 have shifted from a focus on processes of care to one that emphasizes patient outcomes, cost efficiency and use of information technology. For example, the study found a sharp increase in use of outcome measures to reward physician and hospital behavior, with less focus on processes such as keeping rates of mammography screening high. In 2003, sponsors representing 59 percent of enrollees targeted health outcomes; by 2006, 94 percent did. Pay-for-performance adopters are now basing rewards on such things as whether diabetic patients have actually achieved healthy cholesterol levels and blood pressure rates, not just whether or not a doctor has prescribed pills.

Rosenthal and colleagues also found increasing numbers of P4P plans using cost efficiency measures as a target for rewarding physicians and hospitals. In 2003, sponsors representing 60 percent of enrollees included cost efficiency measures as a prominent aspect of their P4P schemes. By 2006, sponsors representing 92 percent of enrollees were using cost of care to measure a physician's performance score.

While the analysis showed that the majority of programs have augmented the pool of money available for performance-based pay, P4P still remains a very small portion of total payments, according to the study, with the average physician bonus translating into about 2.3 percent of reimbursement. Pay-for-performance bonuses are about $1.40 per member per month and range from 20 cents to $15 dollars per member month. Although primary care physicians are still the most common provider type subject to P4P, the inclusion of specialists in P4P increased between 2003 and 2006, with cardiologists and surgeons being among the most likely groups to be brought in. Measurement issues continue to be the largest barrier to including more specialists but the effort to reach out to this group is a significant signal that P4P is here to stay, say the authors.