Pay-for-Performance Advocates Acknowledge Flaws : If not designed carefully, plans can warp physician behavior and fail to improve health care quality.


WASHINGTON – If you're of the mind that the pay-for-performance plans instituted by federal as well as private payors are questionable at best, and potentially dangerous at worst, don't worry: You're not alone. Many leaders of the pay-for-performance movement share your concerns.

Speaking at the fourth World Health Care Congress, advocates of pay-for-performance (P4P) acknowledged that if not designed carefully, these plans could create perverse incentives, warp physician behavior, and ultimately fail in their primary objective of improving health care quality.

P4P leaders admit that in many cases, they're not sure they're tracking the right measures. Furthermore, even if they do get it right, there is little evidence that the measures are truly meaningful to ordinary people needing to make medical decisions.

This doesn't mean P4P is going away any time soon. In fact, P4P plans will only become more widespread in the coming years, spurred on by Medicare's embrace of the concept. But P4P advocates are rapidly finding out they need to assess the impact of their systems as closely as they monitor physician and hospital performance.

“Everything we do must be monitored for unintended consequences. P4P plans are no different. The movement is in its infancy,” said Dr. Tom Valuck, director of value-based purchasing for the Centers for Medicare and Medicaid Services. He cited a recent Institute of Medicine report concluding that while P4P has potential to improve health care systems, experience is still very limited, close monitoring is essential, and plan developers need to build in provisions for rapid redesign and correction.

“P4P may lead to focus on wrong priorities,” said Dr. Valuck. “For example, we can end up focusing on individual accountability instead of system performance. This raises a lot of questions about rewards and incentives.”

Wrongly focused P4P could exacerbate health care disparities, leading to cherry-picking and cream-skimming, and detracting clinical attention from other priorities, he added. “We may end up teaching to the test, while ignoring the bigger picture.”

Dr. Brent James is executive director of the Institute for Healthcare Delivery Research at Intermountain Healthcare, a health system with one of the most proactive quality improvement and performance measurement systems in the nation. An early advocate of P4P, Dr. James said he has learned some important lessons over several attempts at establishing P4P programs.

Where most P4P plans go awry is by being overly focused on arbitrarily chosen individual physician “accountability” measures and not being focused enough on overall systems process measures that tie back to meaningful clinical outcomes, said Dr. James.

“You have to show end-of-day improvement in care. If everyone is doing 'perfect score' medicine, but there's no improvement in outcomes, it means either people are gaming the system or the measures are irrelevant. If you build for system improvement, you'll get accountability data along the way. Build from the bottom up, so as not to damage care.”

Dr. James defines systems transparency as meaning that “you have sufficient information to make a whole series of decisions, and this holds for patients and practitioners alike. It is not as if any one single piece of information tells the whole story or allows one to make a definitive decision. Transparency is a much broader, a much more profound concept than accountability.”

Dr. James said that he is wary of plans that attach heavy financial rewards or penalties to individual physician measures. First, the measures may not be clinically important ones and may end up rewarding “performance” on tasks that do not really lead to better patient care. Second, financial incentives can skew care delivery. “As you attach greater rewards or punishments to achieving a number, you get increasing propensity for suboptimization; you make one area look good at the expense of the others.”

Finally, financial incentives create the wrong sort of motivations. “One of the worst things you can do to physicians is tell them that money is more important than their professional judgment. They will end up believing you,” he said.

An effective P4P program motivates physicians by stressing improved patient care. “Extrinsic awards destroy intrinsic motivation for improvement. Get the professional incentives right, and you get system improvement,” said Dr. James.

Tom Sackville, chief executive of International Federation of Health Plans, and former Minister of Health in Britain, strongly agreed. “Doctors are highly trained, independent-minded, intelligent professionals. They know what they have to do. If they perceive distant bureaucrats throwing bits of fish, they'll start behaving like … performing sea lions. Our doctors pride themselves on having a true vocation. We spoil that at our peril.”

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