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Monday, October 15th 2012

Pay For Perforamnce

Health Affairs periodically published very interesting Health Policy Briefs which are great reads for anyone interested in health policy. Their most recent one is a look at the current state of pay for performance trials. My feelings on such I’ve made known, I think despite the hype their future is limited.

Studies on the effects of pay-for-performance have found mixed results. For example, a study of the Premier Hospital Quality Incentive Demonstration project mentioned earlier, led by Rachel M. Werner at the University of Pennsylvania, found that hospitals in the demonstration initially showed promising improvements in quality compared to a control group. However, the effects were short lived, and after the fifth year of the demonstration, there were no significant differences in performance scores between participating hospitals and a comparison group of hospitals not in the project.

A separate study of the Medicare Premier Hospital Quality Incentive demonstration program, led by Ashish Jha of the Harvard School of Public Health, analyzed 30-day mortality rates for patients with acute myocardial infarction, congestive heart failure, pneumonia, or coronary artery bypass graft surgery between 2004 and 2009. The results showed no difference in mortality rates between hospitals in the Premier demonstration and a control group of nonparticipating hospitals.

Here’s the Premier Hospital Quality Incentive Demonstration Program. Similar CMS, state and private pilot and demonstration programs have failed to live up to the hopes for quality improvement.

Andrew M. Ryan at Cornell University and colleagues studied the first years of the Massachusetts Medicaid hospital pay-for-performance program, which offered financial incentives for improving care for pneumonia and prevention of surgical infections, and found no improvement in quality. Another study led by Steven D. Pearson of Massachusetts General Hospital compared quality performance among Massachusetts’ physician group practices during 2001-03 and found improvement in quality measures across all of the medical groups, regardless of whether or not pay-for-performance incentives were in place. The amount of improvement was consistent with what occurred nationally during the same time period.

Suzanne Felt-Lisk of Mathematica Policy Research conducted a study of seven Medicaid-focused health plans in California from 2002 to 2005, and found that paying financial bonuses to physicians for improving well-child care did not produce significant effects in the majority of participating health plans. The lack of success was attributed to particular characteristics of the Medicaid program, such as enrollees’ lack of transportation and limited staff capacity to do outreach.

Beyond quality, I have doubts about the ability of these programs to substantially shift the health care cost curve. The reality is that true cost control will involve reigning in provider reimbursement, if that is truly a goal, which is inconsistent with the goals of pay for performance.

As for quality improvement, it may be a motivator for such, but the rewards and costs are going to have to be much more substantial. For example, as the Health Affairs Policy Brief notes,

In [a] study assessing the likely effects of Medicare’s Hospital Value-Based Purchasing Program, Werner and coauthors calculated that payments to almost two-thirds of acute care hospitals will be altered by only a fraction of 1 percent.

For any hope of effectiveness I would imagine the numbers involved, and potentially the costs of these programs, are going to have to be much more substantial. I don’t think there’s political will, nor is there likely to be any time soon, to tell providers they’re going to cut their fee schedule 10 or 15% across the board and only give that money back if the physicians meet some quality targets.

Anyway, in sum, you should read the Health Policy Brief from Health Affairs and you should be highly skeptical about the ability of pay for performance initiatives to either improve quality or reduce costs.