AUGUST 23, 2012

Welcome to the Pay for Performance Update eNewsletter
Editor: Philip L. Ronning
This issue sponsored by the Pay for Performance Summit

EDITOR'S NOTE: Recent research publications and associated editorials have produced much discussion around the efficacy of pay-for-performance programs. The growth in the number of such programs, estimated by some to be more than 150, has resulted largely from the interest in "accountable care organizations" and taken place with little or no randomized, controlled analysis to evaluate their effectiveness. Below you will find a sampling of this debate. While many of the stories use similar sources the perspectives vary except on the conclusion that more studies are necessary to refine the application of effective incentives. This amount of attention from the media suggests analysis is needed of current or planned pay-for-performance programs to respond to questions and criticisms.

Pay-for-Performance or Pay-for-Manipulation?
An editorial in the British Journal of Medicine (see story below) suggests the pay-for-performance "rests on flawed assumptions about medicine, measurement and motivation" and may encourage gaming of the system and change "the mindset needed for good doctoring." The article suggests these points: 1) Does the model measure physicians' performance or their ability to game a system? 2) Process-based indicators are "poor proxies for quality of care." 3) Patients' social characteristics present a variable. 4) Medicare accountable care organizations incentivize 33 metrics -- but is that too many? (Becker's Hospital Review, August 15, 2012)

Why Pay for Performance May Be Incompatible with Quality Improvement
Noted authorities on health policy, medicine and behavioral economics argue here that pay-for-performance programs in healthcare are likely to do more harm than good. One of the co-authors of the study, Dan Ariely, a professor of behavioral economics at Duke University and author of books such as The (Honest) Truth about Dishonesty, has said: "Several studies show that while performance-based rewards can increase output for straightforward manual tasks, they can undermine motivation and actually worsen performance on complex cognitive tasks, such as those required in medicine. The unintended consequence is likely a worsening of care, not its improvement." Two of the authors, Himmelstein and Woolhandler, are also visiting professors of medicine at Harvard Medical School and the co-founders of Physicians for a National Health Program, an organization of 18,000 doctors who advocate for a single-payer health care system. The editorial concludes, "We worry that P4P may simply not work because it changes the mindset for good doctoring. However, if P4P schemes must be envisaged then rigorous consideration of their likely benefit prior to their implementation seems essential," referring to an exacting P4P checklist developed by the authors of a related article and discussed below. (British Journal of Medicine, August 14, 2012)

Journal Editorial: Pay-for-Performance a Faulty Policy in Medicine
Massachusetts Governor Deval Patrick signed a healthcare bill with a focus on paying doctors for keeping patients healthy even though several recent publications (see following item) question the value of pay-for-performance programs. This article also quotes extensively from the British Journal of Medicine editorial and links to a previous Boston Globe story on the poor results of the Premier Hospital Quality Incentive Demonstration (HQIP). (Boston Globe, August 15, 2012)

The Effect of Financial Incentives on the Quality of Health Care Provided by Primary Care Physicians
This article, cited in the previous story, reviews the results of seven studies of pay-for-performance programs which employed a variety of research methodologies. The authors conclude: "Despite the popularity of these schemes, there is currently little rigorous evidence of their success in improving the quality of primary health care, or of whether such an approach is cost-effective relative to other ways to improve the quality of care. There is insufficient evidence to support or not support the use of financial incentives to improve the quality of primary health care. Implementation should proceed with caution and incentive schemes should be carefully designed and evaluated." (The Cochrane Library, September 7, 2011)

Medical Journal Cautions that 'Pay for Performance' May Adversely Affect Health Care
This article from the Pittsburgh Post-Gazette relies heavily on the British Journal of Medicine article. It also includes perspectives from Carey Vinson, MD, vice president of quality and medical performance management at Pittsburgh's Highmark Inc. Dr. Vinson said the papers' concerns are well-known in medical circles and often well-founded. "There are limitations to research showing" the effectiveness of pay-for-performance," said Vinson. But he also noted that there is plenty of evidence to suggest the current "fee-for-service" model, which reimburses hospitals and doctors for every test and unit of care, isn't working, either. "We agree that we're not there yet," he said. "Insurers must take caution in designing and implementing performance programs and insurers and providers alike have to find a better way to link quality to payments." (Post Gazette, August 15, 2012)

The Down Side of Pay-For-Performance
This is an excellent blog from Rachel Zimmerman, a reporter from the Wall Street Journal. It covers much of the same ground but gives a brief and valuable review of the BMJ article. (Common Health, August 14, 2012)

Checklist Puts Pay for Performance to the Test
Pay-for-performance efforts may be based on weak evidence, according to an analysis published online August 14 in British Journal of Medicine (BMJ). This article contains a checklist to guide policy makers based on six questions to determine if financial incentives were appropriate and three questions to consider the design of a program. The nine questions are: 1) Does the desired clinical action improve patient outcomes? 2) Will undesirable clinical behaviors persist without intervention? 3) Are there valid, reliable, and practical measures of the desired clinical behavior? 4) Have the barriers and enablers to improving clinical behavior been assessed? 5) Will financial incentives work any better than other interventions to change behavior, and why? 6) Will benefits clearly outweigh any unintended harmful effects, and at an acceptable cost? 7) Are systems and structures needed for the change in place? 8) How much should be paid, to whom, and for how long? 9) How will the financial incentives be delivered? Answering no to any of the first six suggested a program would be premature. Questions 1 through 3 should have a clear "yes," they advised. Answering "no" or "unclear" indicates the need for pilot testing and other checks. Those who proceed anyhow should monitor and evaluate their programs. (Healthimaging.com, August 15, 2012)

Pay for Performance May Improve Treatment Implementation for Adolescent Substance Use Disorders
Bryan R. Garner, Ph.D., and colleagues of the Lighthouse Institute, Chestnut Health Systems, Normal, Ill., report the main effectiveness findings from a cluster of randomized trials to evaluate the efficacy of P4P methods to improve treatment implementation and effectiveness. "Findings from this trial suggest that P4P can be an effective method of improving implementation of evidence-based treatment in practice settings. In an editorial, Alyna T. Chien, M.D., M.S., of Boston Children's Hospital and Harvard Medical School, writes: "Although much more work must be done to connect improved care processes with desired clinical outcomes, this study supports the notion that frontline providers respond to piece-rate P4P incentives related to improving care processes in the treatment of children. Where do the findings of Garner, et. al., fit in the broader landscape of experiments with P4P? Large gaps in our understanding of the effectiveness of P4P strategies persist even though the number of stakeholders and the circumstances in which P4P tactics are being used continue to proliferate rapidly." (Science Codex, August 13, 2012)

Pay for Performance Plans

Healthcare is not the only industry that wrestles with pay for performance. This image, created during a panel discussion of three speakers during one of Organizational Development Network of Chicago's monthly meetings, demonstrates the creative efforts of other industries from whom we can learn.

To update or remove your address, please click the "Unsubscribe/Manage" link below or email your request to: listmgr@HealthcareeNewsletters.com.

Pay for Performance Update e-Newsletter is one of a family of free e-Newsletters providing a complimentary video presentation and regularly updated news and key resources on major health care issues such as ACOs, comparative effectiveness, patient safety, bundled payment, readmissions, and Medicaid. To view and subscribe to other e-Newsletters go to www.HealthCareeNewsletters.com.

The Changing Landscape: Episodes of Care Version 2012 -- A New Deal

Francois de Brantes
Health Care Incentives Improvement Institute, Newtown, Connecticut