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The Trouble With Pay-for-Performance

Philip Betbeze, for HealthLeaders Media, October 24, 2013

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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1 comments on "The Trouble With Pay-for-Performance"


Stefani Daniels (10/28/2013 at 3:46 PM)
First of all, the incentive/penalty cycle should not be directed at hospitals. Under that scenario it is presumed that the hospitals can control/influence medical practice and history has proven that its a hard nut to crack in the current culture. Second, the only strategy that has reaped real change over the years is transparency of data/outcomes. The literature if filled with studies on how hospitals and physicians have changed culture and processes when they know that the outcomes will be viewed by the payers and the rest of the world. Just look at NY State - until they published mortality data associated with open heart surgery, people were dying too frequently. Now, its quite a different story. Published physician specific data and they will change too