Speakers Describe Ways to Realign Payment Systems for P4P

Pay-for-performance programs are "not just about giving physicians financial incentives to do the right thing," said former CMS Administrator Mark McClellan, M.D. Ph.D., at a Dec. 20 press conference here. "If you are a practicing physician, (P4P) is about financial reality under our current payment system."

McClellan, director of the Engelberg Center for Health Care Reform at the Brookings Institution, was part of a panel called together to introduce a report on P4P initiatives (44-page PDF; About PDFs) by the Robert Wood Johnson Foundation's Synthesis Project.

Most primary care physicians are skeptical about P4P efforts, said McClellan, in part because Medicare and most other payers do not pay them to provide care coordination.

In addition, finding accurate and reliable ways to measure performance poses one of the biggest challenges for implementing P4P. "If you cannot measure something accurately, it is awfully hard to support it," said McClellan.

"Many (physicians) don't think the measures do a very good job of reflecting what is important in their actual practice for their individual patients," McClellan said.

He described two P4P modalities. The first involves a traditional, incremental P4P approach that provides physicians with slight increases in payment rates for either reporting on quality levels or achieving some absolute standard of quality based on a limited set of P4P measures.

The second version of P4P, known as the shared-savings model, requires physicians to document patient costs and quality improvement measures. If physicians demonstrate both cost savings and quality improvement, they are allowed to keep most of the savings generated by the program.

Although both approaches are incremental in nature and are conducted as add-ons to existing payment structures, not in place of them, the shared-savings model represents a more profound change that could lead to fundamental shifts in the way care is delivered, McClellan said.

Karen Ignagni, president and CEO of America's Health Insurance Plans, or AHIP, another panel member, said she agrees that the U.S. health care community is on the "precipice of change" in terms of how it thinks about payments.

"The driving force of (payers') activities today is to actually develop relationships and collaborations and to work with clinicians," she said. "That is a change."

The insurance industry, she noted, adheres to an 80/20 rule, which means 20 percent of people consume 80 percent of health care resources, a principle that is the driving force behind disease management, care coordination and the realigning of financial incentives in a P4P environment. But for P4P to succeed, the health care industry and the physician community must adhere to a "template" that makes consistent and uniform measurements possible, she said.

"We really have to have a uniform template because we have to know what (we are measuring)," Ignagni said. In addition, "clinicians have to regard the measurement structure as fair and transparent, something they have participated in designing."

Ignagni pointed out that AHIP worked with the AAFP and other physician-led organizations to create the AQA Alliance, an initiative that has developed about 220 quality measures in 30 areas of care, leading, in turn, to pilot projects funded by CMS.

Panel member Jon Christianson, Ph.D., a professor and the James A. Hamilton Chair in Health Policy and Management at the University of Minnesota, zeroed in on key design issues for P4P programs, asking if payers want to reward achieving targets or reward actual improvement. It is important for payers to determine what type and how many measures they want to track, he said.

Christianson also cited a recent study that says 30 percent of physicians in the United States are covered by P4P programs. Yet, many do not even know the programs exist.

"If the intent of the programs is to change physician behavior by paying them more to do something, it would be useful if they knew (about them)," said Christianson, prompting laughter from the audience.