Healthcare policy makers have the challenging task of cutting costs while improving the quality of care for patients. Many times, these two opposing forces lead to very different results.
But the newest movement in healthcare payments, pay for performance model that pays physicians for improved health outcomes rather than specific services, may not be the all-encompassing solution legislators are looking for.
“The idea that people will be motivated to do better if they are paid more as a result may seem like common sense, but medicine is complex,” said Dr. David Himmelstein, professor at the City University of New York and visiting professor at Harvard University.
He added, “Often the measures used to determine success do not match the conditions of care or patient outcomes the program is meant to address.”
What is Pay For Performance?
Under the PFP arrangement, providers are rewarded for improved health outcomes rather than specific services. This is a fundamental change from the current fee-for-service system, which pays providers per test, procedure, or medical visit.
At the moment, the more services a doctor performs, the more he or she gets paid. As a result, some legislators claim this system promotes wasteful spending and unnecessary services.
While studies are showing mixed results in the PFP model, many elected officials have embraced the concept, including President Barack Obama, who mentioned PFP during this year’s State of the Union address.
“We’ll bring down costs by changing the way our government pays for Medicare because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital,” said President Obama. “They should be based on the quality of care that our seniors receive.”
Measuring Results
A major problem with PFP, experts say, is that results are extremely difficult to measure.
There are significant statistical issues when it comes to measuring outcomes, mostly because treatments can vary from patient to patient.
For example, while one patient may describe a chest contusion as a six on a one to ten pain scale, another patient may describe the same contusion as a two because he or she has a higher tolerance. Better compensating a physician because the second patient reports less pain is paying for differences in patient sensitivity, not the physician’s services.
Even objective measurements, like evaluating a physician’s ability to treat diabetes, can be skewed by genetic differences. A recent study using identical twins concluded that 62% of HbA1c variability – the lab test that shows the average level of blood sugar in a diabetic patient – is genetic. So if a doctor is compensated according to one patient’s HbA1c level, the same formula may not apply to the next.
Mixed Outcomes
For the past decade, PFP programs have primarily been voluntary.
The most well-known public test occurred in 2003 when the administrators of Medicare partnered with Premier Hospitals to see if commission incentives would improve the quality of care for Medicare patients with specific ailments.
According to a University of Pennsylvania study, participating hospitals initially improved. However, no notable difference was recorded between them and hospitals without incentives after five years.
Another study from the Harvard School of Public Health discovered there was no significant decrease in death rates for heart attacks, heart failure, bypass surgery, or pneumonia between patients treated at participating hospitals and those that were not.
Moving Forward
As part of the Affordable Care Act, pay-for-performance initiatives have begun to switch from being voluntary to mandatory. Beginning in October of 2012, Medicare withheld 1% of their funding and redistributed those monies to the best performing hospitals according to a certain set of quality standards.
This was quickly followed by another 1% of funding being withheld from hospitals with the highest readmissions for preventable conditions like heart attacks, heart disease, or pneumonia.
Critics of the program said that using readmissions rates could be tricky because readmissions are sometimes necessary.
According to Robert Wachter, professor, and physician at UC San Francisco, though, about 25% of readmissions are preventable. As a result of the incentive programs, his hospital has changed the way they discharge patients. Now, his team of doctors is clearer with discharge instructions and always performs follow-up calls.
Balance Is Everything
Finding the right balance between patient care and monetary incentives can be difficult. In the end, many doctors got into medicine because of a strong desire to help people. This new pay structure can diminish that inspiration if doctors are only motivated by more profitable outcomes.
“The right answer is going to take advantage of both types of motivation,” Wachter said.
As of yet, supporters, policymakers, and many doctors believe pay for performance is a promising idea with much potential. Let’s hope legislators got it right with the Affordable Care Act and its future implications.
How do you feel about the pay-for-performance model? Do you think that it will improve patient care and reduce healthcare costs? Let us know in the comment section.
