Payers are convinced that compensating physicians and hospitals for meeting quality targets, also known as “pay for performance” (P4P), is an important step in bridging the quality chasm identified by the Institute of Medicine in 1999. Yet physicians and their professional societies, led by the American Medical Association, remain “skeptical to hostile” about “a danger that lurks that a gap will widen between large high quality groups and smaller lower quality physician practices.”1 American Medical Association trustee Nancy Nielsen, MD, reiterates the AMA’s goal of helping physicians improve care quality but says that P4P programs “represent an additional burden on physicians doing more with less.” She notes that the AMA shared its concerns with (former) Centers for Medicare and Medicaid Services (CMS) administrator Mark McClellan, who listened. The result was that the starter set of quality measurements was pared to 16 from 36 (and is now 26), but concerns remain about P4P’s administrative burden.
Physicians are wary of P4P and its implications for their incomes and way of practicing medicine. In fact, in the largest P4P program undertaken thus far, the CMS’s ranking and rewarding of 278 hospitals meeting a series of “core measures,” physician resistance to the program was cited as a major barrier to P4P implementation. Indeed, many but not all physicians seem threatened by this movement. A March 2006 survey of 2727 physicians conducted by the market research firm Hospital Research Associates of Parsippany, N.J., showed that 36% of respondents supported P4P, 27% opposed it, and 47% called it a smokescreen to cut costs.2
Recent History
The P4P movement has been driven by payers’ desire to change the existing reimbursement system, which traditionally has paid physicians the same regardless of the quality of care provided. Instead, through P4P, payers financially reward physicians meeting specific goals around clinical measures, preventive care, patient satisfaction, use of information technology, and cost containment. Although P4P’s overall goal is to reward providers financially for better quality care, laggards might be penalized by a percentage point or two of their revenue streams.
Currently, P4P is still far from being accepted universally by all of health care’s constituents, yet a number of hefty P4P initiatives draw a roadmap to where payers are headed. Medicare’s Health Support Pilots (www.cms.hhs.gov/CCIP ), targeting heart failure and diabetes, encourage participating health plans to pay physicians quarterly for meeting clinical benchmarks and for work performed. The Care Coordination Project, also sponsored by Medicare, rewards physician groups that demonstrate quality-of-care improvements. Results of the Care Coordination Project thus far show that bigger is better: Large group practices far outperform the 75% of physicians practicing either solo or in groups of 10 or fewer physicians, according to the Center for Studying Health System Change. California’s Integrated HealthCare Association (IHA), a consortium of seven major health plans and corporations, started P4P in 2003, paying out more than $50 million in performance bonuses to large physician groups.
P4P: A Moving Target
Dealing with P4P is difficult because different payers use different structures to mete out incentive pay:
- Physician organizations or groups pay their individual doctors bonuses for meeting quality targets.
- Large employers pay individual physicians for improved performance.
- Individual health plans or Medicare pay individual doctors for improved performance.
- Individual health plans or Medicare pay performance bonuses to physician groups, which then allocate incentive pay.
- Multiple health plans coordinate incentive payments to physician groups.
Another twist is that P4P models use both threshold and tiered systems. With thresholds, doctors meeting a quota of required processes or outcomes get financial rewards. Tiered systems rank providers according to their achieving target measures, with top performers receiving bonuses, and outliers losing dollars.
P4P and Otolaryngology–Head and Neck Surgery
David Roberson, MD, Assistant Professor of Otolaryngology and director of patient safety and quality at Boston’s Children’s Hospital, has long tracked his group’s performance outcomes, and sees many obstacles to successful P4P implementation. “I understand why this is happening. In every other field you have objective standards. You read Consumer Reports before buying a car, and Boeing releases detailed specs to its customers before they buy airplanes. Now medicine is going that same route. We need to do this, but it’s going to be extraordinarily expensive and may have negative consequences for some physicians,” he says.
Dr. Roberson identifies small practice size and a limited number of cases on which to base P4P as major problems. Reviewing 10 charts with the same diagnosis, an exercise he has done many times, shows P4P challenges: poor documentation, major decisions made in hospital hallways that go unrecorded, reams of tests not followed up on, and minimal documentation of informed-consent discussions. “For most physician practices, there’s not much strategic thinking about reviewing the work product or building in QI processes,” adds Dr. Roberson.
A critical issue for otolaryngologists and head and neck surgeons is what will be measured. For pediatric specialists, Dr. Roberson conjectures that surgical management of otitis media and of obstructive sleep apnea and tonsillitis are likely P4P targets. With pay and professional reputations on the line, reviewing 150 to 200 charts rather than 10 will be necessary. “Measuring outcomes and rewarding physicians for meeting quality outcomes is a huge culture shift, but without measurement things won’t get better,” he says. That said, payers need to pick clear-cut measures that specialists agree on and that make a difference in the quality of patient care.
David Cognetti, MD, and David Reiter, MD, DMD, MBA, outlining what P4P will mean to otolaryngologists, point out that in the 1990s rewarding and even measuring quality fell by the wayside as “physicians allowed themselves to become commoditized, differentiated from each other only by their cost. Forced to increase patient flow to maintain revenues, physicians were hard pressed to explore quality improvement in their practices.”3 Now, P4P is gaining traction as a way to improve care quality and control costs. Drs. Cognetti and Reiter claim, though, that P4P may have unintended consequences: Basing incentives on patient compliance could encourage physicians to avoid caring for noncompliant patients, doctors may avoid complicated cases, reporting requirements could raise a practice’s information technology (IT) costs, and small groups may not have large enough sample sizes to meet insurers’ performance criteria.
The Right Measures
P4P’s implications for specialists are murky, as most of the 26 current measures apply to primary care. Only three—documentation of tobacco use, smoking cessation advice, and streptococcal testing for children with pharyngitis—are directly applicable to otolaryngology. Skepticism among this specialty runs high; a recent Internet poll of the American Academy of Otolaryngology–Head and Neck Surgery showed that 97% of respondents did not think it was possible for health plans to have the kind of information to accurately identify which physicians meet quality standards.
Like it or not, AAO–HNS leaders are meeting P4P’s challenge with a task force first convened in June to define appropriate metrics for the specialty. Amy Chen, MD, MPH, Assistant Professor of Otolaryngology–Head and Neck Surgery at Emory University School of Medicine and a task force member, says that each of about 12 to 15 subspecialty groups submitted evidence-based outcome measures for the Academy’s consideration at a September meeting. “We will then look at these 24 or so recommendations and pick two to submit to the Academy as possible P4P guidelines,” says Dr. Chen. Then again, head and neck surgeons and pediatric and allergy subspecialists may propose their own metrics.
As the P4P juggernaut proceeds apace, Dr. Roberson hopes that it is implemented gradually so that payers give physicians sufficient time to adapt. “Give people time to measure accurately and to fix their problems,” he says. He also suggests a sliding scale if physicians miss absolute numeric targets by minuscule amounts, a result of random variation. Withholding incentives because of wobbly statistics could unnecessarily penalize physicians. Ultimately, P4P is a physician’s judgment call. If, for example, Medicare automatically deducts 2% from its reimbursement schedule for physicians unable or unwilling to document their quality measures electronically, physicians will have to decide if compliance is worth it.
—David Roberson, MD
Questions Physicians Should Ask about P4P
- What external sources will be used to standardize data collection?
- How can we secure funds for adopting the necessary IT for an electronic medical record?
- What are the right mix and types of incentives for physician performance?
- How should an individual physician be held accountable for the chosen metric?
“We will look at these 24 or so recommendations and pick two to submit to the Academy as possible P4P guidelines.”—Amy Chen, MD, MPH
Notes
- Bodenheimer T, May J, et al. Can money buy quality? Physician response to pay for performance. Center for Health System Change No. 102, December 2005.
[Context Link] - Hospitals must overcome physician resistance before P4P can take root. Health Care Strategic Mgt 2006;24(7):1–4.
[Context Link] - Cognetti D, Reiter D. Editorial commentary: The implications of “pay-for-performance” reimbursement for otolargyngology–head and neck surgery. Otolaryngology–Head and Neck Surgery 2006;134:1036–42.
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©2006 The Triological Society