The Trouble With Pay-for-Performance
There is a move toward using outcomes more in determining reimbursement levels, which is what's happening in the Medicare programs.
"On the hospital side in the first year, incentives were just for process measures and patient experience. In the second year, outcomes will be incentivized, so over time, process measures will get less weight and outcomes will get more," says Ryan. "It will be interesting to see once we start to emphasize action on improving outcomes whether we see those unintended consequences."
Such incentives have a mixed record at best of obtaining the type of care coordination and handoff work desired by both payers and patients. Ryan says health policy for decades has tried to influence payers and providers to replicate Kaiser, a fully integrated system with both a payer and provider component under one roof. That way, he says, incentives are aligned for low costs, efficient care and high quality. Since the Clinton health plan and managed care both collapsed due to a variety of factors unrelated to healthcare transactions, he says P4P has filled the vacuum as something that could be done to influence quality on the margin.
"But the results have certainly not been transformative," he says. "We're at a place where there's almost complete recognition we need to move away from fee-for-service somehow, so we have ACOs, P4P, and CMS experimenting with bundled payment models to pay prospectively rather than retrospectively."
None of those alone has the blueprint to better, cheaper care, he says, adding that messing around at the margins is not likely to bring success.
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