Pay-for-performance programs have hit the mainstream but assessing their effectiveness remains difficult, according to two recent reports on the topic.
The third annual survey by the Leapfrog Group and Med-Vantage indicates that pay-for-performance is widely adopted among physician groups and hospitals, and that these programs are growing ever more sophisticated, encompassing more and more physician specialties.
The primary observation is that pay-for-performance is maturing and leveling off in terms of adoption, says Geoffrey Baker, president and chief executive officer of San Francisco-based Med-Vantage. The breadth and depth of programs have increased.
The Web-based survey included 75 pay-for-performance sponsors, such as government agencies, health plans and purchaser coalitions, and was conducted between February and April with follow-up in November, and examined data from 2006. Collectively, the respondents insure more than 185 million members and represent about 41% of known sponsors nationwide.
Three-fourths of respondents said the programs did help improve quality, including clinical outcomes, patient satisfaction and fewer medical errors. Some 30% said cost performance has improved, such as a return on investment or slowing trends of cost increases. Reporting and payment practices varied across programs, according to the survey.
Physician pay-for-performance initiatives outnumbered hospital programs by 4-1 in the survey. A full 40% of hospitals surveyed said their pay-for-performance program was between 1 and 2 years old.
Another 20% said their program was less than a year old and 33% said it was 3 to 4 years old, the survey found. Some 73% of hospitals used the CMS to develop their pay-for-performance measures, while nearly half used the Hospital Quality Alliance and/or the Leapfrog Group. Some 42% of the hospitals surveyed used new money not otherwise budgeted for their programs, while 33% funded the program with budgeted savings from expected cost reductions and/or included the cost in annual medical expenses.
A report by the Robert Wood Johnson Foundation released in late December 2007 supported the finding that quality indicators improved in incentive programs, but cautioned that it is difficult to disentangle the contribution of P4P from other quality improvement efforts.
Pay-for-performance has gained traction, and financial incentives can be a powerful driver for physician behavior, but physicians remain wary of insurers ability to design effective and fair programs, said Mark McClellan, M.D., director for the Engelberg Center for Health Care Reform at the Brookings Institution and former CMS administrator who pushed pay-for-performance programs during his tenure. A lot of physicians have been skeptical about pay-for-performance and whether these measures actually reflect what theyre doing in their practices, McClellan said during a meeting to release the results.
For these programs to work, there needs to be support for collaborative efforts between stakeholders to test how they work, then come up with measures that could be put into practice, McClellan said.
Nearly one-third of primary-care physicians have pay-for-performance quality incentives in health plan contracts, and about one-fourth of them are paid on quality incentives. Some 20% of health plans said they paid for improvements in performance, and 80% said that they paid for reaching benchmarks, according to the Robert Wood Johnson report.
Roughly 68% of programs included in the Robert Wood Johnson report said physician payments were less than 5% of total physician payments. But the Med-Vantage/Leapfrog survey indicated an average of 10% of total payments.
In the next three years, more specialties will be added to pay-for-performance programs, with a push toward standardization, particularly with the CMS projecting to spend $1.3 billion on performance programs, says Med-Vantage and the Leapfrog Group.
As measures are endorsed and data becomes available, there will be a huge appetite for broader opportunities in pay-for-performance, says Suzanne Delbanco, founder and former CEO of the Leapfrog Group.What do you think? Write us with your comments at [email protected]. Please include your name, title and hometown.