P4P Participation by Primary Care Practices Comes With a Price

A report in the November/December issue of Annals of Family Medicine that analyzed medical practice costs associated with pay-for-performance, or P4P, programs found that participation in quality-reporting programs clearly requires resources with measurable costs. This finding was particularly true for small practices.

The study, "Cost to Primary Care Practices of Responding to Payer Requests for Quality and Performance Data," looked at eight practices in North Carolina that were participating in at least one of four quality-reporting programs:

The Agency for Healthcare Research and Quality, or AHRQ, provided funding for the study. According to Jacqueline Halladay, M.D., M.P.H., an assistant professor in the department of family medicine at the University of North Carolina at Chapel Hill and the study's corresponding author, in 2006, AHRQ identified practice costs as one of the barriers holding back quality data reporting in primary care.

Although hospitals already are engaged heavily in quality reporting, primary care practices have been slow to follow suit, said Halladay. By conducting the study, "We hoped to offer some insights into what the issues and costs are to primary care practices that collect and report quality data," said Halladay. "We felt that such information was important to consider as (quality improvement) programs develop and participation in them evolves from a voluntary exercise into a requirement for reimbursement."

Of the eight practices examined in the study, four were small primary care offices, one was a large group practice, one was a rural nonprofit organization, another was a rural community health center and the last was a small teaching facility.

Although Halladay acknowledged the study's small sample size, she said the study was "preliminary work" undertaken to get physicians and stakeholders to think about practice-level cost issues. The researchers' most important accomplishment was the creation of "cost categories" to help physicians judge potential costs before committing to any quality-reporting initiative, said Halladay.

Researchers visited practices between January 2008 and May 2008. Halladay and her team discovered that most practices got involved with quality improvement work to enhance patient care and didn't consider what their participation would cost the practice. "It was really interesting to go through the process and show them (physicians and administrators) the dollar values," said Halladay, calling it an "eye-opening" experience for practices.

The study found that among the eight practices surveyed, P4P program costs per full-time clinician ranged from less than $1,000 to about $11,000 during the implementation phase. Average costs per clinician during the maintenance phase ranged from less than $100 to about $4,300. Practice costs varied by program characteristics, the level of on-site assistance provided, the experience level of practice personnel and the extent of data system problems encountered.

Major practice expenses included planning, training, registry maintenance, visit coding, data gathering and entry, and modification of electronic systems.

The study authors singled out small primary care practices as taking an "especially hard hit" from program participation costs. They noted that two of the single-physician practices recorded the highest per-clinician costs for each of the three programs for which comparisons could be made.

Researchers found that small practices often needed to hire outside consultants for help with the P4P reporting processes and incurred significant costs in doing so. The solo physicians also reported that they worked on P4P projects after hours, meaning those activities did not directly affect the practice's cash flow but cost physicians personal time.

Overall, Halladay said she was struck by the "deep and profound problems with electronic interoperability," and she noted that practice administrators and staff members spent a lot of time and money getting health information technology systems to cross-communicate.

According to the study, "The lack of interoperatibility among information technology systems was a major problem. It was not only a large component of participation costs, but also a major source of variation between practices participating in the same programs."

Study researchers concluded that physicians' attitudes toward P4P initiatives were "fairly negative," and suggested that organizations attempting to gain physicians' acceptance should offer financial incentives "that allow practices to at least recoup their costs."

Halladay advised physicians to consider forging relationships with quality improvement organizations willing to shoulder some of the work and costs. For example, some programs offer hands-on training to office staff on use of computer systems or teach staff about quality improvement principles. Sharing the workload eases the stress level and the time commitment for physicians and their staffs, according to the study.

Physicians also need to employ a "common sense" approach when assessing how much change their practice -- and their staff members -- can handle, especially when considering engaging in multiple P4P initiatives, said Halladay.

"We found that the most satisfied practices were the ones that carefully limited how many new programs they tried to implement at once," she said. "They kept an eye on their staff's morale and energy levels and made decisions accordingly."