The pay-for-performance movement has rolled across the nation in the past couple of years, fostering scores of new initiatives designed to improve care while cutting costs. But many skittish physicians have been reluctant to embrace a growing trend some consider to be just one more way of squeezing reimbursements and penalizing providers.
Lately, however, the reality that pay-for-performance is here to stay has hit home in America's medical community. After being dragged into the new model by third-party payers, doctors seem to be deciding that it's time to try to set the agenda rather than be swept along as passive players in the next major change to the way healthcare is paid for and provided.
In mid-May, the American Medical Association hosted a meeting on pay-for-performance in Chicago, where leaders of some 20 specialty societies and affiliated groups discussed strategies for dealing with what is becoming one of their most pressing priorities.
"I listened to one or two people around the table who basically said, `Hell, no-we're not going to play until we really understand how this works,' " said William Jessee, president and chief executive officer of the Medical Group Management Association, whose members represent about 240,000 physicians. "My sense is that nobody really knows the best way to do this. But it's obvious there's a lot of momentum behind pay-for-performance-it's not going away."
Until recently, the AMA had remained quiet during much of the public debate. In a column published in the AMA's weekly newspaper in March 2004, board member William Plested blasted pay-for-performance as "the latest scam dreamed up by the multimillionaire CEOs of health insurance companies and HMOs." The AMA did not have a firm policy on the issue until the March release of a set of principles restrictive enough to potentially rule out the group's endorsement of many pay-for-performance plans, including those sponsored by the federal government. One of those principles, for instance, requires that physicians be allowed to voluntarily participate. The AMA did not respond to requests for comment.
Bruce Bagley, medical director of quality improvement for the American Academy of Family Physicians, said most objections to pay-for-performance plans come from doctors concerned that they won't control which measures are used to judge them.
The AMA's tepid reaction stems from the traditional role of organized medical groups to "advocate for and protect" their members, Bagley said. "Pay-for-performance is now seen as something that physicians need to be protected against."
His group has taken a different approach. Bagley said pay-for-performance is a good opportunity for physicians to underscore quality as a selling point and boost their reimbursements in the bargain. "We're working as best we can to make our members aware of what's happening and help position them so when this becomes a market advantage, they can take advantage of it," he said.
Among other efforts, the academy has been at the forefront of national initiatives to develop standardized measures to assess quality.
The Texas Medical Association, like the AMA, has expressed anxiety about whether the "goal of these programs is really to improve quality or whether it's a scheme to save money for health plans," said Lewis Foxhall, a family physician in Houston who chairs the association's council on socio-economics. "On the positive side," he said, "the idea of aligning incentives to promote improvements in quality is a good one. No matter what, we're all going to be dealing with it, so we're trying to understand it. Hopefully, we can make the best of it."
The AMA released its pay-for-performance principles just one day after the Medicare Payment Advisory Commission issued a report to Congress recommending that Medicare begin paying physicians based on how they perform. Under this scenario, as much as 2% of all Medicare payments would be placed in a pool to reward the best performers, a scenario that would reduce reimbursements for those who don't measure up.
In addition to a requirement that all physicians participate, this mandate would violate one of the five key AMA principles, which officials say must be used to evaluate whether pay-for-performance plans are "fair and ethical." The AMA has called for assurances that these plans focus on "improving health outcomes, not reducing utilization," and that they include physician recommendations and use "scientifically sound measures." The MGMA's nine principles underscore the AMA's call for voluntary participation and stipulate that data "must be fully adjusted for sample size and case-mix composition" as the only way to account for variables in outcomes.
The resistance by many in the medical community can be traced to several key concerns, said Stanley Hochberg, a physician who is chief operating officer and medical director of MedVentive, a large consultancy that works with physician groups and academic medical centers. He said physicians are concerned about the validity and overall fairness of the measures used to judge their performance, along with a "general discontent with the payment levels" of these incentive programs and concerns about the costs of collecting the data required to gauge performance.
If doctors dig in their heels, this trend could meet the same fate as other innovative programs in managed care. "I'm not sure doctors were ever onboard for capitation, so they just held back and waited until it died off," said Hochberg, who chaired a two-day conference on pay-for-performance measures in Chicago last week. "I think they might be doing the same thing with pay-for-performance." He suggested pay-for-performance is no cure-all. "It's not going to radically increase reimbursements, it's not going to decrease malpractice costs or the day-to-day stress," he said. "In the short term, at least, it doesn't really solve anything."
Not so, said Jessee and other leaders of an organized medical community that remains sharply divided. They say providers need to develop a more active response to the many programs that have popped up. If the medical community doesn't take the lead, Jessee and others say, federal policymakers will gladly take over.
CMS launches demo project
The federal government took a giant step toward that end in early February, when the CMS announced a national demonstration project involving 10 large medical groups whose combined total of more than 5,000 doctors treat approximately 200,000 Medicare recipients. The project, which began April 1, will provide bonuses of up to 5% of an annual performance target, in addition to fee-for-service reimbursements, based on 32 quality indicators such as blood-pressure management, beta-blocker therapy and colorectal cancer screening. Performance targets for the medical groups, calculated annually, will be based on how much they save Medicare and how well the groups perform on the quality measures.
The CMS has also launched a Hospital Quality Initiative, linking payment to 10 quality measures. About 94% of all hospitals eligible for the program are now participating. In another pay-for-performance initiative, the Premier Hospital Quality Incentive Demonstration, the CMS is collecting data on 34 quality measures related to five clinical conditions at about 300 hospitals, rewarding a 2% bonus to top performers.
John Tooker, a physician who is executive vice president and CEO of the American College of Physicians, said acceptance of pay-for-performance plans by physicians remains low because there is little standardization and a fuzzy notion of what data are used and how they are measured. His group released its position paper on pay-for-performance about 18 months ago and has worked on quality indicators with Bagley's group and the national Ambulatory Care Quality Alliance, which recently adopted 26 measures for outpatient care. The alliance's position paper and guidelines mirror the AMA's, and point out that any assessment must be based on "those elements of clinical care over which physicians have direct and instrumental control."
At this point, Tooker said, most doctors' organizations are focusing almost entirely on the outpatient setting and have little or no involvement with pay-for-performance plans for hospitals. He said it might be a challenge eventually unless standardized measures are adopted rapidly.
The potential for problems in the transition from doctors' offices to hospital rooms presents a "horrible issue," said Margaret O'Kane, president of the National Committee for Quality Assurance, which has collaborated with the CMS and other groups on pay-for-performance. "But this goes beyond the boundaries from physician to hospital to just about every place in the delivery system. There are just so many disconnects out there." The CMS, she noted, is about to launch a five-year demonstration project aimed at addressing how to measure and coordinate care between physician groups and hospitals and health systems.
The CMS demonstration project for the 10 big physician groups is just the latest in a string of similar programs developed in recent years by the federal agency, insurance companies and employers who believe financial incentives will eventually save billions of dollars and dramatically reduce unnecessary hospitalizations. Many programs are also designed to spur adoption of electronic record-keeping systems, a prerequisite for the kind of data gathering that usually must accompany the precise tracking of care.
For now, most of the beneficiaries of pay-for-performance are huge medical groups with the kind of information technology that allows them to measure their performance. Most small practices and solo practitioners don't have that capability and probably won't for the foreseeable future because of high costs, said Donald Fisher, president and CEO of the American Medical Group Association, which represents some of the nation's biggest and best-known medical groups.
Two months ago, Fisher's group launched its own variation on a pay-for-performance plan, kicking off a so-called results-based payment system he said goes one vital step further than traditional plans by focusing more accurately on outcomes. "Most of these programs look at whether the doctor did what he should have done," Fisher said. "But the question is: Are people better as a result of these interventions? Did the patient have a good result?"
While estimates vary, the Commonwealth Fund counts as many as 105 pay-for-performance programs in the U.S. The Leapfrog Group, which has been working on an institutional pay-for-performance project called the National Hospital Rewards Program, estimates that there are about 90 such efforts, with more on the way. Med-Vantage, a consulting firm that has surveyed scores of plans, said there were 84 initiatives covering more than 39 million patients in November 2004, numbers that have since risen to about 104 plans and millions more individuals. Among the best-established is the Integrated Healthcare Association, which includes six California HMOs covering approximately 45,000 doctors, 8 million patients and a bonus pool in the tens of millions of dollars.
The AMA is far from alone among doctors' organizations in its arm's-length approach to this hot topic. The American College of Physicians, though an early leader in helping frame the debate, is opposed to any widespread pay-for-performance mandates by the federal government, suggesting instead that the next step should be a measured approach that includes an expansion of demonstration projects.
Despite these misgivings, recent developments show growing momentum for pay-for-performance. Earlier this month, for instance, a subcommittee of the House Committee on Education and the Workforce held a hearing that underscored the concept as a vital "cornerstone" in efforts to improve healthcare safety and efficiency. Among the programs cited: Bridges to Excellence, a not-for-profit coalition of employers, providers and health plans that is realigning incentives around the quality of care in three areas: diabetes care, cardiac care and modernization of physicians' offices.
Also last month, in an online survey of nearly 300 healthcare opinion leaders, the Commonwealth Fund found that 57% of respondents believe that pay-for-performance programs are an "extremely" or "very effective way" to reduce healthcare costs. Yet a separate study by Commonwealth Fund researchers, published in the May/June issue of Health Affairs, helped underscore the concerns many providers have about gathering and sharing information on their treatment of patients.
More than two-thirds of the respondents, culled from a questionnaire mailed to about 3,600 randomly selected physicians, said the "general public should probably or definitely not have access to such information" on clinical performance, a consensus that doesn't bode well for widespread acceptance.
"If we're going to have performance-based compensation, we have to be willing to share information," said Anne-Marie Audet, assistant vice president of quality improvement at the Commonwealth Fund. "If physicians are reluctant to share, it's going to be very difficult to base financial rewards on performance."
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