Pay for performance (healthcare)


In the healthcare industry, pay for performance, also known as "value-based purchasing", is a payment model that offers financial incentives to physicians, hospitals, medical groups, and other healthcare providers for meeting certain performance measures. Clinical outcomes, such as longer survival, are difficult to measure, so pay for performance systems usually evaluate process quality and efficiency, such as measuring blood pressure, lowering blood pressure, or counseling patients to stop smoking. This model also penalizes health care providers for poor outcomes, medical errors, or increased costs. Integrated delivery systems where insurers and providers share in the cost are intended to help align incentives for value-based care.
Professional societies in the United States have given qualified approval to incentive programs, but express concern with the validity of quality indicators, patient and physician autonomy and privacy, and increased administrative burdens.

Studies and trends

Pay for performance systems link compensation to measures of work quality or goals. Current methods of healthcare payment may actually reward less-safe care, since some insurance companies will not pay for new practices to reduce errors, while physicians and hospitals can bill for additional services that are needed when patients are injured by mistakes. However, early studies showed little gain in quality for the money spent, as well as evidence suggesting unintended consequences, like the avoidance of high-risk patients, when payment was linked to outcome improvements.
The 2006 Institute of Medicine report Preventing Medication Errors recommended "incentives...so that profitability of hospitals, clinics, pharmacies, insurance companies, and manufacturers aligned with patient safety goals;... strengthen the business case for quality and safety." A second Institute of Medicine report Rewarding Provider Performance: Aligning Incentives in Medicare stated "The existing systems do not reflect the relative value of health care services in important aspects of quality, such as clinical quality, patient-centeredness, and efficiency...nor recognize or reward care coordination... prevention and the treatment of chronic conditions." The report recommends pay for performance programs as an "immediate opportunity" to align incentives for performance improvement. However, significant limitations exist in current clinical information systems in use by hospitals and health care providers, which are often not designed to collect data valid for quality assessment.
After reviewing the medical literature in 2014, pediatrician Aaron E. Carroll wrote in The New York Times that pay for performance in the US and UK has brought "disappointingly mixed results". These disappointing results were confirmed in 2018 by health economist Igna Bonfrer and co-authors in The BMJ, based on an observational study among 1,371,364 US patients aged 65 years and older. Sometimes even large incentives do not change the way doctors practice medicine. When incentives do change practice, clinical outcomes do not improve. Critics say that pay for performance is a technique borrowed from corporate management, where the main outcome of concern is profit. In medical practice, many important outcomes and processes, such as spending time with patients, cannot be quantified.

Commentary by physician organizations

In the United States, most professional medical societies have been nominally supportive of incentive programs to increase the quality of health care. However, these organizations also express concern over the choice and validity of measurements of improvement, which may include process measures that do not directly tie to outcomes. The American Medical Association has published principles for pay for performance programs, with emphasis on voluntary participation, data accuracy, positive incentives and fostering the doctor-patient relationship, and detailed guidelines for designing and implementing these programs.
Positions by other physician organizations question the validity of performance measures, and whether it will preserve an individual physician's clinical judgement, a patient's preferences, autonomy and privacy. They question whether it will lower costs, although it will increase administrative costs.
  • American Academy of Family Physicians: "there are a multitude of organizational, technical, legal and ethical challenges to designing and implementing pay for performance programs"
  • American College of Physicians: "adoption of appropriate quality improvement strategies, if done right, will result in higher quality patient care leading to increased physician and patient satisfaction. But the College is also concerned that these changes could lead to more paperwork, more expense, and less revenue; detract from the time that internists spend with patients, and have unintended adverse consequences for sicker and non-compliant patients." "... concerned about using a limited set of clinical practice parameters to assess quality, especially if payment for good performance is grafted onto the current payment system, which does not reward robust comprehensive care."
  • American Geriatrics Society: "quality measures target not only care for specific diseases, but also care that addresses multiple, concurrent illnesses and tested among vulnerable older adults. Using indicators that have been developed for a commercially insured population...may not be relevant"
  • American Academy of Neurology : "An unintended consequence is that current relative payments are distorted and represent a misaligned incentive system, encouraging diagnostic tests over thoughtful and skilled patient care. The AAN recommends addressing these underlying inequities before a P4P program is adopted.
  • The Endocrine Society: "it is difficult to develop standardized measure across medical specialties...variations must be allowed to meet the unique needs of the individual patient...P4P programs should not place financial or administrative burdens on practices that care for underserved patient populations"

    Implementation

Germany

As of 2015, Germany was typically not a value-based system, but value measurements were coming more common; notable examples include required quality systems introduced in 2000, coinciding with a diagnostic reimbursement group payment scheme in 2000, followed a biannual reports mandate in 2005, and outcomes in 2007.

France

In France, P4P in ambulatory care was introduced as individual contracts between physicians and statutory health insurance in 2009 and termed CAPI. Fourteen months later, 14,800 contracts were signed, representing one third of eligible GPs. They were signed on a voluntary basis for a three-year period and could be broken at any time on the GP's demand. The additional payment took into account the size of the population and the achievements for a number of indicators, for which final as well as intermediate targets were defined. Depending on the baseline measures for the GP's practice, either final or intermediate targets were considered in determining the level of remuneration. There were no penalties for GPs who did not achieve the targets. With effect in 2012, CAPI were renamed ROSP and incorporated into the collective agreements between doctors and statutory health insurance, with an expanded list of objectives and an extension to specialties such as cardiology.

United Kingdom

In the United Kingdom, the National Health Service began a major pay for performance initiative in 2004, known as the Quality and Outcomes Framework. General practitioners agreed to increases in existing income according to performance with respect to 146 quality indicators covering clinical care for 10 chronic diseases, organization of care, and patient experience. For example, family practitioners got points for clinically reviewing patients with asthma every 15 months. Unlike proposed quality incentive programs in the United States, funding for primary care was increased 20% over previous levels. This allowed practices to invest in extra staff and technology; 90% of general practitioners use the NHS Electronic Prescription Service.
A 2006 study found that most of the doctors actually did get most of the points, although some practices seemed to have gotten high scores by excluding patients with high-risk factors from their percentage targets. The 8,000 family practitioners included in the study had an increase in revenue by $40,000 by collecting nearly 97% of the points available.
A 2014 study examined 1.8 million hospital charts, and found that the mortality in control hospitals fell more than mortality in the pay-for-performance hospitals. Short-term improvements were not maintained. At the end of the 42 month period, the reduction in mortality for the 3 conditions covered by the program at the participating pay-for-performance hospital was no longer significant; however, there was a significantly larger reduction in mortality at participating hospitals for the 5 conditions not covered or incentivized by the program. This indicates a possible "spill-over" effect.
A 2015 population based study investigated the relationship between mortality and performance on the scheme across the whole of England. Although all-cause and cause-specific mortality rates declined over time, there was no significant relationship between practice performance on quality indicators and all-cause or cause-specific mortality rates in the practice locality. Higher mortality was associated with other well-known predictors: greater area deprivation, urban location, and higher proportion of a non-white population.

United States

New York State Model GBUACO

The Greater Buffalo United Accountable Care Organization, New York State's first Medicaid accountable care organization, is the state's first value-based payment pilot. The Greater Buffalo United Accountable Care Organization was the 1st Medicaid and Commercial ACO in New York State. It received 1 of 5 NCQA ACO recognitions in the country. The model of integrated health care and high-level results displayed by Greater Buffalo United Accountable Care Organization have been set as the building ground for other ACOs in the state. The pilot agreement was between GBUACO & the YourCare Health Plan. Under VBP, GBUACO's network of health care professionals will be compensated based on the quality, and not the quantity, of care delivered. An ACO is a patient-centered care model that aims to raise patient care quality, reduce costs and streamline health care delivery. A total of 15 organizations are taking part in this VBP feasibility study.
Under the VBP system, doctors and health care providers have to meet clearly defined quality metrics that focus on prevention and managing chronic diseases. Through care coordination, providers are incentivized for keeping their patients in the ACO healthy, minimizing expensive emergency room visits, hospital stays and costly duplicative medical tests. Under VBP shared savings, total spending is compared with a target: if the organization's spending is below the target, it can share some of the difference as a bonus.
"GBUACO is proud to once again be leading the way in health care reform," said Raul Vazquez, M.D., GBUACO president and chief executive officer. "We are honored to have been approved for this pilot, and we are excited to play a pivotal role as an early adopter of the VBP program. GBUACO stands ready to be an active participant in providing lessons learned and sharing best practices for statewide VBP implementation."
The New York State Department of Health's Delivery System Reform Incentive Payment Program is overseeing the two-year pilot VBP program. The effectiveness of the program is measured by how well each ACO performs within the predetermined metrics.
Through this agreement, GBUACO Outperformed both State and National Averages.
The ACO did better than the Nation in all 12 measurable Metrics in 2018.
The ACO also did better than the State in 9 of 15 Metrics in 2018.