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P4Ps on the rise; some question use of plans

The number of pay-for-performance programs has practically quadrupled in the last five years, according to a report released last week, and—in the past few weeks—it appears that the number of related items in the news has proliferated by a similar percentage.

Even as payers issue glowing news releases about the expansion of their programs' scope and the millions of dollars in physician rewards they're dispersing, government officials, research organizations and physicians are questioning the motivation and methodology of current pay-for-performance programs. In the end, the one industry segment that may truly be happy with pay-for-performance programs are health IT vendors who can persuade providers that their electronic systems are absolutely necessary for the data management that require such programs.

The data, from healthcare informatics group Med-Vantage and the Leapfrog Group, projected there will be 155 pay-for-performance programs in place this year, compared with only 39 in 2003. A report that came out two weeks ago and may hold long-term significance came from PricewaterhouseCoopers. The report looked at 10 different pay-for-performance programs and found that, together, they used almost 60 different physician-performance indicators, no one indicator was used by all 10 programs, and no two programs rewarded providers the same way.

Pay-for-performance programs can be an important tool to link payment to quality, the PWC report stated, "But the wide variation in program structures, performance metrics and rewards structures mutes their potential impact."

"I thought the report by PWC was pretty much on the money," said Francois de Brantes, national coordinator for the Bridges to Excellence physician-reward program. "Most of the employers and the plans we work with are increasingly cognizant of the fact that this dispersion of attention just creates a lot of noise, and that we need to strengthen the signal by having very clear standardized measures used by multiple plans and employers in a single community."

Bridges to Excellence made news last week by announcing it now has more than 100 employers and health plans working in 19 regions participating in its physician office, diabetes-, cardiac- and spine-care programs.

"Physicians have to know 'If I do this, I'll get a positive hit from multiple parties,' " de Brantes said. "To be effective, P4P needs very clear criteria and performance thresholds: You get to this level of performance, you get a bonus. And not just from Plan A, but from Plan B, Plan C and from others that are also participating."

While mostly in use on the East Coast, Aetna announced in May that it would use Bridges to Excellence standards for pay-for-performance programs in Washington state.

Meanwhile, the physician-ranking programs under consideration for use by insurers Aetna, Cigna HealthCare and UnitedHealth Group have come under scrutiny by New York State Attorney General Andrew Cuomo, who expressed concern that the rankings may be used to steer patients toward less-expensive rather than higher quality providers.

In an e-mail, Aetna spokeswoman Cynthia Michener said Aetna is fully cooperating with the request for information, is committed to transparency and is reaching out to medical societies to address physician concerns about reliable data.



Palmisano Palmisano
Former American Medical Association president and Joint Commission board member Donald Palmisano, however, expressed support for Cuomo's investigation.

"Cuomo's concern is a valid one," said Palmisano. "It's been frequently stated that this (pay-for-performance programs and physician rankings) is more of a rationing plan for health plans to make more money. It's an attempt to control prices—but not for the benefit of the patient or the benefit of the doctor."

Palmisano, a New Orleans surgeon and attorney who now operates Intrepid Resources, a risk-management, patient-safety and claims-review consulting service, expressed disdain for the whole concept of pay-for-performance programs.

"First off, a physician has an ethical and fiduciary responsibility to do what's in the best interests of the patient," he said. "I think it's insulting to think that giving me an additional amount of money will make me do what I'm supposed to do."

De Brantes said he thought Cuomo may be addressing physician concerns rather than patient concerns.

"I'm not sure it's just New York state," he said. "We're seeing an increasing amount of providers across the country expressing doubts about the data used for performance assessment."

And while Palmisano criticized the concept, the American Board of Internal Medicine last month issued a news release trumpeting how the Blue Cross and Blue Shield Association, Cigna HealthCare, Humana and WellPoint were incorporating the board's maintenance of certification programs into their physician reward programs.

Although Aetna wasn't signaled out by the board, the company noted that its measures are developed from standards "consistent" with those created by the American Heart Association, American College of Obstetricians and Gynecologists and the CMS.

Along with plethora of differing measures, the Pricewaterhouse report noted that the physician rewards offered were generally too low to make a significant difference. And while the federal government's pay-for-performance plan offers a bonus to boost reimbursement by 1.5%, the Pricewaterhouse report stated "some payers noted that they thought it would take at least a 10% reward to affect physician clinical behavior, but noted that they could not secure the necessary commitment from the health plan's leadership to fund the programs at that level."

On Aug. 24, two days after the Pricewaterhouse report was released stating that rewards were too low, Blue Cross of California (a subsidiary of WellPoint) announced that it was rewarding 126 physician groups a total of $69 million in bonuses for performance in 2006. About a week earlier, Blue Shield of California announced that it distributed $31 million in bonus money.

In an e-mail, Michael Belman, medical director for clinical quality and innovations at Blue Cross of California, said rewards continue to grow and have increased from the initial payout of $25 million in 2003. He added that the program is a part of the Integrated Health Association's pay-for-performance effort involving a collaborative of 200 California medical groups and seven health plans (including Blue Shield of California), and that "data acquisition is coordinated and we use the same quality metrics across the entire set of provider organizations so in this program we have minimized the administrative burden."

The Pricewaterhouse report noted how pay-for-performance programs that rely on comprehensive patient-chart audits are "especially burdensome" for providers, and how this problem could be diminished by electronic medical records—but the financial rewards offered by pay-for-performance programs may not be large enough to merit the investment in EMRs.

"We do believe some IT building blocks have to be put in place to reduce the burden on providers," said Sam Muppalla, chief operating officer of Portico Systems, a Conshocken, Pa.-based software provider for health plans. "Our viewpoint is that payers need to optimize provider data quality."

Muppalla added that he has seen an increase in IT adoption that has corresponded with the growth of pay-for-performance programs, and that simultaneously the more IT is used, the more useful pay-for-performance programs can become. Instead of annual paper reports, Muppalla said physicians should be able to go on a Web site and check their progress monthly and, eventually, every two weeks.

Muppalla said that, on a 1-to-5 maturity scale, pay-for-performance is currently at a 2.

"I'm hoping we can get to a 3 in the next couple of years," he said, adding that this will require better availability of software, standards for exchanging data and pressure from providers for access to their data so they can use it whenever they need it.

For de Brantes, the key is to have doctors begin their own systematic collection of data that will provide them with internal feedback that is "plan agnostic."

"That way they can look at the data for all their patients—not just one plan at a time," he said.

Hindy Shaman, a Pricewaterhouse director who participated in the creation of the pay-for-performance report, said wider IT adoption would "pave the way for standardized measures," make it easier to validate physician data and reduce the administrative costs of the programs.

"All the different measures are just a morass for people to deal with, and the concern is that people will just throw their hands in the air and give up," she said. "It doesn't mean that the solution itself is wrong. It's just that we're going about it the wrong way with everyone inventing their own yardstick. It doesn't need to be this hard and we're doing ourselves a disservice by having so much variation."

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