Topic last updated August 2008
Aligning Payment Policies with Care: Incentives and Rewards for Improvement
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Incentives and rewards for improvement – pay for performance
Public and private health insurers as well as employers are increasingly developing initiatives that pay physicians in ways that provide incentives for medical practices to provide more preventive services, improve clinical outcomes, and enhance patient safety and satisfaction with the care they receive.
Arguments can be made both for and against these “pay for performance” (PFP) programs. They appear to have the potential to increase physician use of electronic health information technology, evidence-based clinical guidelines, administrative and clinical best practices, patient access to appropriate and timely care, and to lower health care costs (see AAFP policy statement referenced below).
Major challenges faced by PFP programs include:
- the cost of acquiring information technology
- multiple PFP programs and guidelines
- data collection
- linking PFP to physician payment
- adapting performance measures to Numerous physician organizations in concert with the American Medical Association, promote the following principles and believe that any PFP program must be aligned with them.the needs of patients with complex comorbidities
- preventing deselection of challenging patients
- rewarding comprehensive team care.
Numerous physician organizations in concert with the American Medical Association, promote the following principles and believe that any PFP program must be aligned with them.
- Focus on improved quality of care
Utilize evidence-based clinical guidelines
Involve practicing physicians in program design
- Support the patient/physician relationship
Provide patient-centered care
Act in the best interests of the patient
- Offer voluntary physician participation
Support participation by physicians in all practice settings
- Use reliable and accurate data
- Provide positive physician incentives
Details about the above principles can be found at:
American Medical Association Recommendations on Pay for Performance
American College of Physicians Position Paper 2007
AAFP policy statement on pay for performance
American Association of Clinical Endocrinologists PFP resources
Endocrine Society position statement
The Centers for Medicare and Medicaid Services (CMS), in collaboration with a wide range of other public agencies and private organizations,has various initiatives in many health care settings to improve quality of care for beneficiaries and avoid unnecessary health care costs. CMS also provides technical assistance to a wide range of health care organizations through its Quality Improvement Organizations. Recognizing that many quality improvement efforts are patient-focused and cut across settings of care, CMS is pursuing PFP initiatives to support better care coordination for patients with chronic illnesses including diabetes.
Information about CMS activities to improve quality of care includes:
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The purchaser role
Whether purchasers are public or private, small or large, or insured or self-insured, strategies are available that allow them to play a leadership role in addressing the human and financial costs of the quality care problem. The Midwest Business Group on Health suggests a four-step process that purchasers can employ.3
- Analyze employer-specific health care data in order to identify high-priority problems.
- Measure the performance of plans and health care professionals, and engage them in continuous improvement programs.
- Educate consumers and share performance information with them.
- Reward high-quality health plans and effective health care professionals through direct incentives, public recognition of best performers, incentives for consumers to choose quality, shared-savings contracts, and/or selective contracting.
Implementing these initiatives requires a commitment of both time and money on the part of purchasers, health plans, and health care professional organizations. Purchasers must be willing to share some of the cost savings generated from quality improvement.3
Companies could consider collaborating with others through business coalitions, associations, health plan user groups, and/or local employer associations. In addition to providing access to needed expertise, a cooperative approach creates added leverage and economies of scale, as health care organizations and plans are more likely to pay attention to quality improvement initiatives if the sponsors of that initiative represent more people.3
The Health Plan Employer Data and Information Set (HEDIS®) is a set of standardized performance measures designed to enable purchasers and consumers to reliably compare the performance of managed health care plans. Measures are included for cancer, heart disease, smoking, asthma and diabetes. HEDIS also includes a survey of consumer experiences in areas such as customer service, access to care, and claims processing. The National Committee for Quality Assurance sponsors HEDIS. web.ncqa.org
The Agency for Healthcare Research and Quality (AHRQ) offers a decision guide for purchasers and tools for implementing pay for performance. www.ahrq.gov/qual/p4pguide.htm
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The role of business groups
A number of business groups across the country suggest that providing compensation for quality improvement efforts could help achieve the desired results and also improve patient outcomes. These groups include the Leapfrog Group, Pacific Business Group on Health, National Business Group on Health,National Business Coalition on Health, Midwest Business Group on Health, and others.
The Leapfrog Group has a primer that offers specific examples to demonstrate the challenges involved in developing successful programs, and features best practices from 13 pilot initiatives. www.leapfroggroup.org/media/file/IncentivesRewards_Primer.8.15.06.pdf
The Pacific Business Group on Health collects performance data and negotiates performance guarantees tied specifically to quality targets for each of the HMOs used by the purchasers it represents. The data are publicly reported for both purchasers and consumers. www.pbgh.org/programs/PhysicianPerformance.asp
The National Business Group on Health (www.businessgrouphealth.org is a non-profit organization that represents large employers. It hosts the Diabetesatwork.org website. It provides a brief on pay for performance Click here.
The National Business Coalition on Health (NBCH) www.nbch.org represents over 10,000 employers and approximately 34 million employees and their dependents and is engaged in projects to improve diabetes outcomes and result in measurable changes in diabetes care and quality.
The Midwest Business Group on Health (www.mbgh.org) develops and supports initiatives that test tools and improve community health care.
The National Diabetes Education Program in collaboration with several partners provides an online Health Resource Kit to help businesses and managed care companies assess the impact of diabetes in the workplace. It also provides easy-to-understand information for employers to help their employees manage their diabetes and take steps toward reducing the risk for diabetes-related complications such as heart disease. The site contains assessment tools, a planning guide, choosing a health plan, lesson plans, fact sheets and resources. www.diabetesatwork.org
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Issues: Aligning Payment Policies: Examples