Point/Counterpoint on Pay-for-Performance

Many physicians now participate in pay-for-performance programs and receive incentive bonus payments for meeting quality targets. Nevertheless, there is still considerable debate on whether this approach will improve patient care and reduce costs. As part of this discussion, we have introduced a point-counterpoint article on this important subject and invited 2 experts to address it.

Point: Why I Fear Pay-for-Performance

On "Point," we welcome Robert M. Centor, MD, Professor and Director, Division of General Internal Medicine, University of Alabama School of Medicine; Associate Dean, Huntsville Regional Medical Campus; President-elect, Society of General Internal Medicine.

Point: Robert M. Centor, MD

For every complex problem, there is a solution that is simple, neat, and wrong. -- H.L. Mencken

During the course of my medical career, I have experienced several solutions to the healthcare delivery problem. The big initiative of the 1980s and 1990s, managed care, was the solution to overspending and controlling healthcare expenditures. Managed care, while still present, has morphed into a system that no longer rewards primary care excellence. Few policy makers see managed care as the ideal method for providing our healthcare.

The most recent "fad" idea that we discussed involves quality and errors. We have commissions that decry the errors in medical care. The literature on quality continues to report on substandard quality in delivering evidence-based care.

The pay-for-performance movement (and does not the phrase evoke a sense of moral virtue?) assumes that physicians will provide better care if we provide financial incentives to do the right things. The concept has great validity on its face. Pay-for-performance has become a sound-bite phrase, which politicians eagerly adopt.

So who could oppose motherhood, apple pie, and quality? No one can oppose the drive for improved quality, but I do oppose current efforts to adopt pay-for-performance.

Excellent medical care requires excellence in at least 3 dimensions. First, one must make the correct diagnoses. If we expect correct treatments, we must assume diagnostic accuracy. Of course, difficulty with diagnosis ranges from trivial to very complex.

Second, one must deliver the appropriate care for an individual problem. If the patient has one problem, then an algorithm can direct quality care. I know that all patients who have congestive heart failure should have an angiotensin-converting enzyme inhibitor prescribed. However, we know less about how one should consider quality when patients have multiple diseases. In adult medicine, many patients have multiple diseases, each having complex care guidelines.

Third, we should develop a plan given the context of the patient's situation. We must understand the financial and social constraints of our patients. We must communicate with our patients, understanding who they are and what kind of care they desire.

I submit that current pay-for-performance plans only address part of one dimension of care. They will reward physicians for caring "correctly" for patients having a single known problem. But I also submit that this formulation may not reward the right physicians, or even encourage total excellence.

An example might help make this clear.

A 54-year-old man with type 2 diabetes mellitus goes to see his physician for a routine visit. The first physician checks his eyes and feet. He orders a hemoglobin A1c and a lipid profile. He adjusts the antihypertensive medications. Flu and pneumonia vaccines are administered. At the end of the 20-minute visit, as the doctor is leaving the room, the patient mentions that he has begun experiencing chest pain on his daily walks with his wife. The doctor, obviously in a rush to see his next patient, quickly reassures the patient that they will address that issue at the next visit. Two weeks later, the patient has a large anterior myocardial infarction.

The second physician starts by asking the patient if he has any new symptoms. The patient mentions the chest pain immediately, and the entire visit is spent on addressing the chest pain. She sends the patient for a stress test (which is positive) and then to cardiac catheterization. While doing this, she does not address the eyes, feet, glucose control, lipids, or blood pressure. The patient needs coronary artery bypass surgery.

If we just look at the chart for diabetes performance indicators, the first physician gets a perfect score. If we look at overall care, the second physician has done a better job.

Thus, one can imagine that focusing on one dimension of care could compete with adequate focus on other dimensions. Economists warn us to always consider the externalities of our decisions. Once we develop an incentive system, we will clearly prioritize how physicians spend their time with patients. These incentives might improve the care of some patients, yet decrease the time the physician spends on diagnosis. We might overemphasize filling out the "checklist" and ignore excellence in the doctor-patient relationship.

Even if we can avoid these externalities, we still have a problematic system. How do we balance multiple diseases? How do we prioritize treatment when constrained by economic realities?

Yet the appeal of pay-for-performance will persist because of its surface validity. I urge the medical community and payers to work to understand all the implications of pay-for-performance prior to advocating its adoption.

We must understand how a pay-for-performance system would influence patient care. What would happen to all the dimensions that play a role in overall care?

If we are not cautious, we will risk becoming like the drunk in the famous, oft-used joke:

A man sees his drunken friend circling a lamppost at night.
"What are you doing there, Bill?"
"I'm looking for my house key."
"But you lost it in the tavern, Bill."
"I know, but there's more light here."

If we develop an incentive system that only focuses on the light, then we may well miss other important aspects of doctoring. If so, patient care and outcomes may not improve.

Counterpoint: Quality Measures and Pay-for-Performance

On "Counterpoint" we welcome Michael S. Barr, MD, MBA, FACP, Vice President, Practice Advocacy & Improvement, American College of Physicians.

Counterpoint: Michael S. Barr, MD

Pay-for-performance (P4P), pay-for-quality, pay-for-reporting -- these are all terms that, for many physicians, elicit as much enthusiasm (perhaps even less) as getting paged in the middle of the night to treat a common cold. However, for better or worse, this is one of the hot topics in reimbursement for medical care. Not only is P4P a third-rail topic unto itself, but it involves other such notable issues and buzzwords as payment reform, quality improvement, patient safety, healthcare costs, efficiency, and value. P4P is often coupled with phrases such as "value-based purchasing," "evidence-based benefit design," "consumer-directed healthcare," and "performance measures" -- just to name a few. All of these terms relate in some way to assessing quality and cost, and using the resulting information to develop alternative means of directing patients and compensating physicians.

The Institute of Medicine report from 2001, Crossing the Quality Chasm,^[1] laid out 6 aims for 21st century healthcare, and another report, published in 1999, To Err is Human,^[2] reported a very high number of avoidable deaths from medication-related errors. The key messages of these reports, as well as subsequent studies, are that there are gaps in the quality of care and health disparities across different populations of Americans, and that higher cost does not equal better care.^[3] The Commonwealth Fund Medicare Chartbook illustrates an inverse relationship between the cost of care and quality of care across the United States -- that is, quality was highest in the lowest-cost regions -- and the lowest quality was associated with the highest cost. The annual cost of care for a Medicare beneficiary in Hawaii, one of the highest-quality states, was around $4000, whereas prior to Hurricane Katrina, the cost of care for an average Medicare beneficiary in Louisiana was $8000 - and this was the state where the lowest quality of care was measured.^[4]

In addition to data demonstrating the variability of healthcare costs and quality across the United States, double-digit growth in public expenditures on programs such as Medicare and Medicaid, as well as rising private sector healthcare premiums, have led employers to insist on "value" for the money they spend on healthcare. Over time, payers have introduced performance and efficiency measures as a condition of contracts, have created pay-for-performance programs, and have begun to use physician-specific performance data to inform consumers. Payers are now generating evidence-based benefit designs to direct patients to physicians who are perceived to be delivering higher quality for lower cost.[5] Congress tried to introduce value-based purchasing at the end of 2005 and is likely to revisit this in 2006 by linking calls for reform of the current sustainable growth rate formula for setting Medicare payment rates to acceptance of accountability for quality. In November 2005, the Centers for Medicare and Medicaid Services (CMS) announced the Physician Voluntary Reporting Program (PVRP). The PVRP may form the basis for a pay-for-reporting program by late 2006 or 2007.^[5]

Over the next few years, it is likely that an increasing portion of physician payments will be based on achieving measurable quality improvements. There is no single model.^[6,7] However, programs will require physicians to demonstrate value by reporting their performance based on quality, efficiency, and patient experience measures. CMS will likely tie elements of reimbursement to physicians' willingness to be held accountable to these measures and to report to the public on the results. Performance measurement data will be used to generate publicly available reports on quality -- and patients will select physicians who are guided by those reports.

Many physicians have indicated significant concerns about P4P, and rightfully so. The challenge, however, is for physicians to reframe their thinking so that they consider the external realities motivating change in healthcare and the perspectives of consumers, purchasers, and payers - remembering that when physicians aren't wearing white coats, they are also consumers and purchasers of healthcare. Although healthcare professionals probably do not think of medical care as being ranked the way consumer products are, it is probably fair to say that people outside of healthcare are not as quick to make that distinction. There are already over 100 private-payer pay-for-performance programs covering more than 40 million patients, and consumer-directed health plans are becoming more popular with employers.^[8] These numbers will continue to increase.

In response to the changing environment, the American College of Physicians (ACP), American Academy of Family Physicians (AAFP), America's Health Insurance Plans (AHIP), and the Agency for Healthcare Research and Quality (AHRQ) convened the Ambulatory Care Quality Alliance (AQA) in 2004. The AQA charge is to "improve healthcare quality and patient safety through a collaborative process in which key stakeholders agree on a strategy for measuring performance at the physician level; collecting and aggregating data in the least burdensome way; and reporting meaningful information to consumers, physicians and other stakeholders to inform choices and improve outcomes." A full discussion of the AQA is beyond the scope of this brief article, but all documents are made public on the AQA Web site. It is now a large multi-stakeholder organization that is developing principles and guidance for private and public payers on performance measurement, public reporting, and data aggregation. Medical professional societies such as the ACP and AAFP were able to leverage the work of the AQA to influence CMS to modify the original PVRP set of measures for primary care and the methodology by which CMS intends to collect measurement data.

Healthcare providers and health systems are being pushed to accept accountability for costs, quality, and the variation in the relationship between cost and quality -- which some refer to as efficiency. Pay-for-performance is not the answer to the dysfunctional payment system. However, it is one mechanism being promoted by consumers, purchasers, and payers. If done correctly, P4P could provide better alignment between those physicians who are effective at improving care by investing in the infrastructure to provide that enhanced care -- and at least some marginal recognition in the form of compensation for those services. The ultimate goal, however, is to redesign the reimbursement system and move away from the fragmented, episodic, illness-oriented fee-for-service model, to one that recognizes the value of patient-centered, physician-guided care. This model would acknowledge that quality is enhanced when coordination of care, investment in health information technology, and accepting accountability for documenting improvements in quality are supported by compensation commensurate with effort -- a component of which would be pay-for-performance.

Feedback

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Other Resources

Ambulatory Care Quality Alliance
www.ambulatoryqualityalliance.org

American College of Physicians papers
http://www.acponline.org/advocacy/

American College of Physicians. Position Paper: Linking Physician Payments to Quality Care. Philadelphia, Pa: American College of Physicians; 2005. Available from American College of Physicians, 190 N. Independence Mall West, Philadelphia, PA 19106; www.acponline.org/hpp/link_pay.pdf.

Barr M, Ginsburg J. Policy Monograph: The Advanced Medical Home: A Patient-Centered, Physician-Guided Model of Health Care, 2006. Available from American College of Physicians, 190 N. Independence Mall West, Philadelphia, PA 19106; www.acponline.org/hpp/adv_med.pdf.