Is Pay-for-Performance the Cure to What Ails Medicine?

With Wall Street in shambles because chief executives weren't held responsible for their 'risky business,' health care conglomerates could begin reexamining pay-for-performance (P4P) plans with a hungrier eye. A recent Kaiser Family Foundation poll suggests that health care is now the second most important issue behind the economy for undecided voters; so is the stage, electoral and otherwise, set for doctors to be accountable in the same way as our CEOs? There are some problems with that assumption, as P4P isn't necessarily the cure-all for what ails the system.

Rising health care costs

The current Medicare system pays doctors for every procedure they do, rewarding costlier procedures that may or may not be necessary. In the last couple of years, P4P has been getting more airplay as health care costs have been skyrocketing. According to the Kaiser Foundation, the cost of insurance increased 6.1 percent in 2007, which bested the overall inflation rate of 2.6 percent and the increase in worker's pay (3.7 percent). So, while the underlying crux of P4P makes sense—reward doctors if they actually make their patients feel better—the initiative is rife with problems.

Are carrots enough to feed society's ills?

Pay-for-performance initiatives have been adopted by at least 100 insurers and employers nationwide. The metrics P4P systems use are many times improperly applied to the patient's detriment, and the nature of the system encourages cherry-picking patients who will perform well using particular metrics that could leave the elderly, chronically ill, smokers, alcoholics, obese patients or noncompliant patients out in the cold. Hospitals can also dump these less desirable patients on to other hospitals because they don't want to risk losing P4P payments, or physicians in group practices might decrease their Medicare patient load to accrue higher bonuses.

A study that compared 81 Massachusetts physician groups that were eligible for quality incentives with 73 that were ineligible during 2001-2003 showed P4P made no significant difference in health care improvement. The study, featured in Health Affairs journal, showed that overall performance improved on 73 percent of preventive care measures, but the individual performance of the 5,350 physicians was statistically indistinguishable, whether the doctor earned a bonus (ranging from $200 to $2,500 per quality measure) or not.

Last October Medicare, the government agency that is projected to cover 44.8 million elderly and disabled this year, jumped on the P4P bandwagon and issued a list of eight hospital-acquired conditions, such as severe bedsores or complications arising from leaving a sponge in a patient post-op, that it would refuse to pay for. Earlier this month the list increased to 10 to include surgical site infections and deep vein thrombosis following orthopedic procedures, and many expect the list to continue to grow year after year. The problem with this program is it doesn't take into account complications, say a sudden infection that arises despite best hospital practices.

Medicare also has a program called the Physician Quality Reporting Initiative (PQRI) that pays doctors a 1.5 percent bonus for reporting particular quality measures. Medicare has doctors follow 16 measures, including administering aspirin and beta blockers to patients who have suffered heart attacks, and rewards them accordingly. We live in an era of the specialist, and health care is distributed among many physicians. So who gets the carrots in that multi-physician equation and who takes responsibility for the patient's less-than-desirable outcomes?