Pay for Performance Not Yet Showing Efficacy

SEATTLE — When the physicians of Rochester, N.Y., first had a pay-for-performance program imposed upon them, they ignored it.

"At the beginning of our program, most people would not acknowledge it existed," said Dr. Howard B. Beckman, the medical director of the Rochester Individual Physician Association (IPA). "As we talked about the profiles, people said 'I never got them,' 'I threw them away,' or 'I don't care.'"

That denial ended when the first performance-based checks were disbursed, and after 3 years, pay-for-performance measures have paid off in reduced health plan costs of almost $5 million, Dr. Beckman said at the annual research meeting of AcademyHealth.

Dr. Beckman was one of three physicians who presented research on whether pay for performance improves quality of care and efficiency in medicine enough to make worthwhile all the effort being put into it. He was the only one of the three to have a positive conclusion.

The other two investigations of pay for performance, in California and Massachusetts, looked more specifically at individual aspects of clinical care. Those investigators found they could not document an impact from the programs.

But those investigators also pointed out that, as in Rochester, it takes time for physicians to get accustomed to the idea of greater accountability, and to develop the capabilities to record and report for the programs, so their findings might reflect that the programs have not been going long enough. Or the findings may show that financial incentives do not work for professionals, something research in other fields has suggested, they noted.

After the first performance bonus checks were sent out and denial ended, there was anger. The physicians complained that strict performance measures impinge on their autonomy, and they were even offended by the implication that money could influence their behavior, he said.

Then, after 2 years, the general resistance abated, and the angry phone calls stopped, Dr. Beckman said. Now when he gets phone calls about the program, it is an individual physician trying to negotiate something.

The Rochester IPA represents all 3,200 physicians in the Rochester area and has insurance contracts that cover about 50% of the community market.

The program's individual physician payments vary, but overall the program pays out about $15 million a year, and the average internist can earn from $4,000 to $12,000 from the quality reports. Dr. Beckman looked at the provider profile data for patients with diabetes. He found that when expected costs were compared with actual costs in the diabetes patients in 2003 and 2004, there was a savings of about $1 million in the first year and $2 million in the second year. Most of that savings, about $1.3 million, came from reduced inpatient hospitalization costs.

Dr. Beckman pointed out that many people have expressed concern that pay-for-performance programs could be unfair to physicians with the most difficult, least compliant patients, so he looked at different practices. It appeared that differences were greater between individual doctors than they were between practices and practice locations.

Pay for performance began in California at about the same time as the Rochester program, and it has yet to show any meaningful overall improvement in clinical care, said Cheryl L. Damberg, Ph.D., a researcher for the RAND Corp. who has been analyzing data from the California collaborative managed by the Integrated Healthcare Association, which includes seven HMOs and point-of-service plans contracting with 225 physician groups.

Surveys of patient satisfaction, a part of performance that is rewarded, showed gradual, substantive improvement in the first 2 years of the program, but when Dr. Damberg looked at clinical care measures, such as aspects of diabetes care, Pap smears, and childhood immunization, any improvement seen between years is inconsistent and varied.

She concluded, based on an analysis of the patterns of improvement, that many physicians and groups are getting up to speed with reporting, so it is too early to judge the impact on actual clinical care.

In Massachusetts, doctors with pay-for-performance contracts have improved their quality since programs were introduced into the state, but so have doctors without contracts, said Dr. Steven D. Pearson, director of the Center for Ethics in Managed Care at Harvard Medical School, Boston.

He looked at data collected from the state's pay-for-performance programs put together by the Massachusetts Health Quality Partnership, a collaboration of five nonprofit health plans covering 4 million people, and physician groups representing some 5,000 primary care physicians.

Comparing Health Plan Employer Data and Information Set measures from groups with pay-for-performance contracts and control groups without contracts, Dr. Pearson found that, for four measures, the contract groups had more improvement for those years than the control groups. For 21 measures, the groups had similar improvement, but for five measures the control groups had more improvement.

Moreover, when he restricted his analysis to just groups termed "high-incentive" groups, there was still no more improvement than controls. High-incentive groups were defined as ones that could receive performance bonuses of $100,000 or more, or for whom individual primary care physicians could receive bonuses of more than $1,000.

There are two plausible explanations for the findings, Dr. Pearson said. "Either P4P has worked in Massachusetts because it is part of this atmosphere of driving quality improvement … or P4P has failed because it is either too weak—not enough money on the table—or it was poorly designed."

Fragmented Care Poses Dilemma For P4P System

Pay-for-performance schemes may be thwarted by patients seeing too many doctors, making it difficult to assign any one patient's care to a particular physician, according to a study that was presented at the annual research meeting of AcademyHealth.

The average Medicare patient sees seven physicians (two primary care, five specialists) over a 2-year period, Dr. Hoangmai Pham, a senior researcher with the Center for Studying Health System Change, Washington, said at the meeting.

Dr. Pham analyzed data from Medicare sources that included claims data and nationwide physician surveys for 2000–2003. Only 53% of Medicare beneficiaries' evaluation and management visits, and 35% of their total visits, are with the physician identified as their primary, or usual-source-of-care, physician.

During a 2-year period, 30% of beneficiaries switch their usual-source-of-care physician, and in 59% of the cases where beneficiaries switch, they never even see one of the designated physicians in a year, Dr. Pham said.

According to the physician survey data, a primary care physician's regular, usual-source-of-care patients make up an average of only 39% of his or her total patient population.

In today's medical environment, it takes more than one doctor to care for a patient, Dr. Pham said.

The Department of Health and Human Services has committed the Medicare program to advancing the concept of pay for performance, Dr. Pham noted. But what is really needed is an overhaul of the medical system to allow single physicians or groups to be responsible for individual patients. Alternatively, more financial incentive in pay for performance would make it worthwhile to invest in the infrastructure physicians need to participate, because they will be able to show good performance for only a small proportion of their patients, she added.

SEATTLE — When the physicians of Rochester, N.Y., first had a pay-for-performance program imposed upon them, they ignored it.

"At the beginning of our program, most people would not acknowledge it existed," said Dr. Howard B. Beckman, the medical director of the Rochester Individual Physician Association (IPA). "As we talked about the profiles, people said 'I never got them,' 'I threw them away,' or 'I don't care.'"

That denial ended when the first performance-based checks were disbursed, and after 3 years, pay-for-performance measures have paid off in reduced health plan costs of almost $5 million, Dr. Beckman said at the annual research meeting of AcademyHealth.

Dr. Beckman was one of three physicians who presented research on whether pay for performance improves quality of care and efficiency in medicine enough to make worthwhile all the effort being put into it. He was the only one of the three to have a positive conclusion.

The other two investigations of pay for performance, in California and Massachusetts, looked more specifically at individual aspects of clinical care. Those investigators found they could not document an impact from the programs.

But those investigators also pointed out that, as in Rochester, it takes time for physicians to get accustomed to the idea of greater accountability, and to develop the capabilities to record and report for the programs, so their findings might reflect that the programs have not been going long enough. Or the findings may show that financial incentives do not work for professionals, something research in other fields has suggested, they noted.

After the first performance bonus checks were sent out and denial ended, there was anger. The physicians complained that strict performance measures impinge on their autonomy, and they were even offended by the implication that money could influence their behavior, he said.

Then, after 2 years, the general resistance abated, and the angry phone calls stopped, Dr. Beckman said. Now when he gets phone calls about the program, it is an individual physician trying to negotiate something.

The Rochester IPA represents all 3,200 physicians in the Rochester area and has insurance contracts that cover about 50% of the community market.

The program's individual physician payments vary, but overall the program pays out about $15 million a year, and the average internist can earn from $4,000 to $12,000 from the quality reports. Dr. Beckman looked at the provider profile data for patients with diabetes. He found that when expected costs were compared with actual costs in the diabetes patients in 2003 and 2004, there was a savings of about $1 million in the first year and $2 million in the second year. Most of that savings, about $1.3 million, came from reduced inpatient hospitalization costs.

Dr. Beckman pointed out that many people have expressed concern that pay-for-performance programs could be unfair to physicians with the most difficult, least compliant patients, so he looked at different practices. It appeared that differences were greater between individual doctors than they were between practices and practice locations.

Pay for performance began in California at about the same time as the Rochester program, and it has yet to show any meaningful overall improvement in clinical care, said Cheryl L. Damberg, Ph.D., a researcher for the RAND Corp. who has been analyzing data from the California collaborative managed by the Integrated Healthcare Association, which includes seven HMOs and point-of-service plans contracting with 225 physician groups.

Surveys of patient satisfaction, a part of performance that is rewarded, showed gradual, substantive improvement in the first 2 years of the program, but when Dr. Damberg looked at clinical care measures, such as aspects of diabetes care, Pap smears, and childhood immunization, any improvement seen between years is inconsistent and varied.

She concluded, based on an analysis of the patterns of improvement, that many physicians and groups are getting up to speed with reporting, so it is too early to judge the impact on actual clinical care.

In Massachusetts, doctors with pay-for-performance contracts have improved their quality since programs were introduced into the state, but so have doctors without contracts, said Dr. Steven D. Pearson, director of the Center for Ethics in Managed Care at Harvard Medical School, Boston.

He looked at data collected from the state's pay-for-performance programs put together by the Massachusetts Health Quality Partnership, a collaboration of five nonprofit health plans covering 4 million people, and physician groups representing some 5,000 primary care physicians.

Comparing Health Plan Employer Data and Information Set measures from groups with pay-for-performance contracts and control groups without contracts, Dr. Pearson found that, for four measures, the contract groups had more improvement for those years than the control groups. For 21 measures, the groups had similar improvement, but for five measures the control groups had more improvement.

Moreover, when he restricted his analysis to just groups termed "high-incentive" groups, there was still no more improvement than controls. High-incentive groups were defined as ones that could receive performance bonuses of $100,000 or more, or for whom individual primary care physicians could receive bonuses of more than $1,000.

There are two plausible explanations for the findings, Dr. Pearson said. "Either P4P has worked in Massachusetts because it is part of this atmosphere of driving quality improvement … or P4P has failed because it is either too weak—not enough money on the table—or it was poorly designed."

Fragmented Care Poses Dilemma For P4P System

Pay-for-performance schemes may be thwarted by patients seeing too many doctors, making it difficult to assign any one patient's care to a particular physician, according to a study that was presented at the annual research meeting of AcademyHealth.

The average Medicare patient sees seven physicians (two primary care, five specialists) over a 2-year period, Dr. Hoangmai Pham, a senior researcher with the Center for Studying Health System Change, Washington, said at the meeting.

Dr. Pham analyzed data from Medicare sources that included claims data and nationwide physician surveys for 2000–2003. Only 53% of Medicare beneficiaries' evaluation and management visits, and 35% of their total visits, are with the physician identified as their primary, or usual-source-of-care, physician.

During a 2-year period, 30% of beneficiaries switch their usual-source-of-care physician, and in 59% of the cases where beneficiaries switch, they never even see one of the designated physicians in a year, Dr. Pham said.

According to the physician survey data, a primary care physician's regular, usual-source-of-care patients make up an average of only 39% of his or her total patient population.

In today's medical environment, it takes more than one doctor to care for a patient, Dr. Pham said.

The Department of Health and Human Services has committed the Medicare program to advancing the concept of pay for performance, Dr. Pham noted. But what is really needed is an overhaul of the medical system to allow single physicians or groups to be responsible for individual patients. Alternatively, more financial incentive in pay for performance would make it worthwhile to invest in the infrastructure physicians need to participate, because they will be able to show good performance for only a small proportion of their patients, she added.

SEATTLE — When the physicians of Rochester, N.Y., first had a pay-for-performance program imposed upon them, they ignored it.

"At the beginning of our program, most people would not acknowledge it existed," said Dr. Howard B. Beckman, the medical director of the Rochester Individual Physician Association (IPA). "As we talked about the profiles, people said 'I never got them,' 'I threw them away,' or 'I don't care.'"

That denial ended when the first performance-based checks were disbursed, and after 3 years, pay-for-performance measures have paid off in reduced health plan costs of almost $5 million, Dr. Beckman said at the annual research meeting of AcademyHealth.

Dr. Beckman was one of three physicians who presented research on whether pay for performance improves quality of care and efficiency in medicine enough to make worthwhile all the effort being put into it. He was the only one of the three to have a positive conclusion.

The other two investigations of pay for performance, in California and Massachusetts, looked more specifically at individual aspects of clinical care. Those investigators found they could not document an impact from the programs.

But those investigators also pointed out that, as in Rochester, it takes time for physicians to get accustomed to the idea of greater accountability, and to develop the capabilities to record and report for the programs, so their findings might reflect that the programs have not been going long enough. Or the findings may show that financial incentives do not work for professionals, something research in other fields has suggested, they noted.

After the first performance bonus checks were sent out and denial ended, there was anger. The physicians complained that strict performance measures impinge on their autonomy, and they were even offended by the implication that money could influence their behavior, he said.

Then, after 2 years, the general resistance abated, and the angry phone calls stopped, Dr. Beckman said. Now when he gets phone calls about the program, it is an individual physician trying to negotiate something.

The Rochester IPA represents all 3,200 physicians in the Rochester area and has insurance contracts that cover about 50% of the community market.

The program's individual physician payments vary, but overall the program pays out about $15 million a year, and the average internist can earn from $4,000 to $12,000 from the quality reports. Dr. Beckman looked at the provider profile data for patients with diabetes. He found that when expected costs were compared with actual costs in the diabetes patients in 2003 and 2004, there was a savings of about $1 million in the first year and $2 million in the second year. Most of that savings, about $1.3 million, came from reduced inpatient hospitalization costs.

Dr. Beckman pointed out that many people have expressed concern that pay-for-performance programs could be unfair to physicians with the most difficult, least compliant patients, so he looked at different practices. It appeared that differences were greater between individual doctors than they were between practices and practice locations.

Pay for performance began in California at about the same time as the Rochester program, and it has yet to show any meaningful overall improvement in clinical care, said Cheryl L. Damberg, Ph.D., a researcher for the RAND Corp. who has been analyzing data from the California collaborative managed by the Integrated Healthcare Association, which includes seven HMOs and point-of-service plans contracting with 225 physician groups.

Surveys of patient satisfaction, a part of performance that is rewarded, showed gradual, substantive improvement in the first 2 years of the program, but when Dr. Damberg looked at clinical care measures, such as aspects of diabetes care, Pap smears, and childhood immunization, any improvement seen between years is inconsistent and varied.

She concluded, based on an analysis of the patterns of improvement, that many physicians and groups are getting up to speed with reporting, so it is too early to judge the impact on actual clinical care.

In Massachusetts, doctors with pay-for-performance contracts have improved their quality since programs were introduced into the state, but so have doctors without contracts, said Dr. Steven D. Pearson, director of the Center for Ethics in Managed Care at Harvard Medical School, Boston.

He looked at data collected from the state's pay-for-performance programs put together by the Massachusetts Health Quality Partnership, a collaboration of five nonprofit health plans covering 4 million people, and physician groups representing some 5,000 primary care physicians.

Comparing Health Plan Employer Data and Information Set measures from groups with pay-for-performance contracts and control groups without contracts, Dr. Pearson found that, for four measures, the contract groups had more improvement for those years than the control groups. For 21 measures, the groups had similar improvement, but for five measures the control groups had more improvement.

Moreover, when he restricted his analysis to just groups termed "high-incentive" groups, there was still no more improvement than controls. High-incentive groups were defined as ones that could receive performance bonuses of $100,000 or more, or for whom individual primary care physicians could receive bonuses of more than $1,000.

There are two plausible explanations for the findings, Dr. Pearson said. "Either P4P has worked in Massachusetts because it is part of this atmosphere of driving quality improvement … or P4P has failed because it is either too weak—not enough money on the table—or it was poorly designed."

Fragmented Care Poses Dilemma For P4P System

Pay-for-performance schemes may be thwarted by patients seeing too many doctors, making it difficult to assign any one patient's care to a particular physician, according to a study that was presented at the annual research meeting of AcademyHealth.

The average Medicare patient sees seven physicians (two primary care, five specialists) over a 2-year period, Dr. Hoangmai Pham, a senior researcher with the Center for Studying Health System Change, Washington, said at the meeting.

Dr. Pham analyzed data from Medicare sources that included claims data and nationwide physician surveys for 2000–2003. Only 53% of Medicare beneficiaries' evaluation and management visits, and 35% of their total visits, are with the physician identified as their primary, or usual-source-of-care, physician.

During a 2-year period, 30% of beneficiaries switch their usual-source-of-care physician, and in 59% of the cases where beneficiaries switch, they never even see one of the designated physicians in a year, Dr. Pham said.

According to the physician survey data, a primary care physician's regular, usual-source-of-care patients make up an average of only 39% of his or her total patient population.

In today's medical environment, it takes more than one doctor to care for a patient, Dr. Pham said.

The Department of Health and Human Services has committed the Medicare program to advancing the concept of pay for performance, Dr. Pham noted. But what is really needed is an overhaul of the medical system to allow single physicians or groups to be responsible for individual patients. Alternatively, more financial incentive in pay for performance would make it worthwhile to invest in the infrastructure physicians need to participate, because they will be able to show good performance for only a small proportion of their patients, she added.