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The brave new world of pay-for-performance programs

From the January-February ACP Observer, copyright 2005 by the American College of Physicians.

By Robert B. Doherty

Are physicians ready for pay-for-performance?

Many federal officials and large employers believe the answer is "yes." Even more to the point, the federal government and private purchasers are poised to use their collective clout to accelerate the rapid adoption of pay-for-performance programs, even if physicians think the models being used for those programs are not yet ready for prime time.

Purchasers are convinced that pay-for-performance can improve quality and potentially reduce costs. Their prevailing attitude is that "this is our money"—whether it is company funds buying employee health care benefits or taxpayer dollars covering Medicare beneficiaries--and that they have a right to demand that their money be spent only on good quality care. Even though some purchasers admit that pay-for-performance programs remain largely untested, they insist that moving forward is better than sticking with a status quo where quality is completely divorced from payment.

Unanswered questions

However, the world outside the corporate suites and government offices where those decisions are being made looks very different. Most practicing physicians have no experience with pay-for-performance. Most do not have electronic medical records or patient registries to help them improve performance, track results, and collect and report necessary data. (See "Pay-for-performance takes off in California.")

While hundreds of clinical performance measures have been developed, neither the medical community nor insurers have reached consensus on how to choose criteria to prioritize clinical conditions or select the best measures to use for those conditions.

And even if those agreements are reached, a host of other unanswered questions remains. Should physicians be rewarded for trying to implement process improvements that may contribute to better outcomes? Or should they be rewarded only if they actually achieve better outcomes?

Should more money be pumped into the system to create bonus pools to reward better performance? Or will purchasers fund pay-for-performance programs in a budget-neutral fashion, with the gains for physicians who do well cutting into payments for those who do worse?

What relative weights will be assigned to different dimensions of measured care? How will data be collected, who will pay for their collection and how much of a burden will this process be on physicians and their staffs? And finally, who will control the collected data's use and dissemination?

Physicians are also worried about potential unintended adverse consequences. Without risk adjustments, outcome-based measures could create an incentive to not treat patients with more complex diseases. If performance measure results are made available to the public, will data be presented so physicians aren't punished for the severity of their patients' illness? Or will patients be discouraged from choosing physicians whose outcomes are poorer because they see sicker patients?

Potential gains

Despite these risks and uncertainties, pay-for-performance programs could benefit both patients and physicians. Encouraging better care through adherence to evidence-based guidelines is an excellent and achievable goal. Another good goal is rewarding internists who act upon their lifelong commitment to quality improvement.

That's why the College has accepted the challenge to advocate for policies that support the interests of internists and their patients, instead of relying on the government and private insurers to write the new rules of pay-for-performance programs.

ACP's efforts fall into three categories: policy advocacy; measure selection and prioritization; and participation in program design on a demonstration-project basis. Let's take a closer look at each of those components:

  • Policy advocacy. The College's position paper, "The Use of Performance Measurements to Improve Physician Quality of Care," contains the policy framework that guides all of the College's efforts. The paper advocates for the following:

    • that physician participation in performance measurement programs be voluntary;
    • that measures should be evidence-based and clinically relevant;
    • that risk adjustment should be applied to outcome-based measures;
    • that electronic medical records and other health information technology should support performance measurements; and
    • that programs linking reimbursement and public reporting to performance measurement should first be tested on a demonstration project basis.

    The College has also strongly advocated for additional dollars to support pay-for-performance programs, not a redistribution of existing payments in a budget-neutral manner.

  • Prioritization and measurement selection. The College has appointed a Performance Measurement Subcommittee, chaired by Kevin B. Weiss, FACP, to review and validate performance measures based on the strength of clinical evidence, clinical relevance and other criteria.

    ACP is also a co-convener—along with America's Health Insurance Plans, the American Academy of Family Physicians and the Agency for Healthcare Quality and Research—of a leadership summit that seeks to reach consensus on a prioritized list of clinical conditions and on the selection of uniform measures for each condition. The first meeting, which included representatives from the medical profession, government, purchasers, health plans, accreditation and performance measurement development groups, met in November to frame the discussion points.

    At that meeting, separate work groups were assigned to develop draft recommendations on prioritization and selection of measures, and on issues relating to data collection, aggregation and reporting. The work groups' recommendations will be presented to a second leadership summit to be held later this month.

  • Participation in demonstration projects. The College has endorsed and regularly participates in policy-making meetings for the Doctor's Office Quality Information Technology (DOQ-IT) program, a Medicare demonstration project being launched in four states. The program will help physicians select electronic medical record systems and provide financial incentives so they can achieve quality improvements through the use of that technology.

    ACP is also partnering with two companies selected by the Centers for Medicare and Medicaid Services to participate in the chronic care improvement pilot program. (The value of ACP's support was proven when two College-endorsed projects were among the 10 selected by Medicare officials, out of more than 80 competing bids.)

    The College will be working with McKesson Health Solutions and other team partners in the Mississippi pilot program, and with Health Dialog in Pennsylvania. Each program will test innovative models to improve the care of patients with diabetes and congestive heart failure. And each company is committed to supporting the physician's key role in chronic care improvement by working with the College to create financial incentives linked to evidence-based performance measures.

Without the College's involvement in these and other programs, there is no question that pay-for-performance programs would still go forward because the people paying the bills—the government and large employers—will insist on it. But with the College's participation, we have a much better chance of implementing programs that will include the best available evidence while providing positive incentives for physicians.

Our goal is to make sure that big public and private purchasers take into account the practical realities of what is involved in designing quality improvement initiatives. The alternative is for physicians to have foisted on them theoretical models that don't work—or that may even jeopardize the real world of patient care.

Robert B. Doherty is ACP's Senior Vice President for Governmental Affairs and Public Policy.

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