Pay for Performance Not Ready for Prime Time

Opinion: The premise of pay for performance is hard to disagree with. It is, however, hampered by two facts.

The premise of pay for performance is hard to disagree with: Doctors and institutions that provide better care should earn more money. This premise, however, is hampered by two facts: No one knows the best way to implement such a program, and if different health care payers implement different programs, the effects will be diluted.

Over 100 pay-for-performance efforts have been launched so far in the United States, according to congressional testimony given last week by Meredith Rosenthal, a professor of health economics and policy at the Harvard School of Public Health.

Most programs use simple measures of performance: Providers are financially rewarded for achieving goals in, say, childhood immunization rates, the percent of patients receiving aspirin after undergoing coronary bypass surgery, or the length of time required to administer antibiotics to hospitalized pneumonia patients. Last year, CMS (Centers for Medicare and Medicaid Services) launched a program that will reimburse hospitals up to 2 percent more than standard rates, according to their performance of 34 such measures. Early results from a study by CMS show that hospitals are improving in these areas.

"Quality has crossed over into the CFOs office," said Wes Champion, vice president of Capgemini Healths business strategy and transformation practice. "There is a good creative tension between the payer and provider because at the heart of this pay for performance is a better quality of care delivered to the patient." Champion thinks pay for performance, if implemented properly, could be a win-win-win situation for patients, payers and providers.

But if programs dont measure what matters, they could actually squeeze out other safety practices, said Richard Ward, CEO of Reward Health Sciences, a consultancy specializing in IT and care management. Ward told me that he likes that concept of measuring improvement, but that hes seen health care providers abandon more worthwhile goals to boost rates of less important services: "The more you standardize, the more people will pursue superficial means [to hit measurement targets]."

Worse, providers might actually shun patients who are less healthy or less likely to comply with doctors orders.

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