In response to persisting quality problems in clinical practice, policymakers in various countries, including Australia, are experimenting with pay-for-performance (P4P) schemes that tie a portion of provider payments to performance on measures of quality.
Rigorous studies of P4P efficacy are relatively few, with many focused on preventive care in ambulatory settings and many suggesting only modest gains in performance.
Several key issues need to be considered in determining the optimal design and implementation methods for P4P programs, including:
the choice of clinical practice area;
the size of financial incentives and who should receive them;
the selection of quality measures and performance thresholds that determine incentive eligibility;
data collection methods; and
the best mix of financial and non-financial incentives.
A proposed framework to guide Australian initiatives in P4P emphasises early clinician involvement in development, a phased approach from “pay-for-participation” in performance measurement to P4P within several pilot demonstration programs, and investment in clinical information technology.
- 1. Lindenauer PK, Remus D, Roman S, et al. Public reporting and pay for performance in hospital quality improvement. N Engl J Med 2007; 356: 486-496.
- 2. Trisolini M, Pope G, Kautter J, Aggarwal J. Medicare Physician Group practices: innovations in quality and efficiency. New York: The Commonwealth Fund, December 2006.
- 3. Bridges to Excellence. Rewarding quality across the healthcare system [website]. http://www.bridgestoexcellence.org/ (accessed May 2007).
- 4. The Leapfrog Group [website]. http://www.leapfroggroup.org/home (accessed May 2007).
- 5. McDermott S, Williams T, editors. Advancing quality through collaboration: the California Pay for Performance Program. Oakland, Calif: Integrated Healthcare Association, February 2006. http://www.iha.org/wp020606.pdf (accessed May 2007).
- 6. Doran T, Fullwood C, Gravelle H, et al. Pay-for-performance programs in family practices in the United Kingdom. N Engl J Med 2006; 355: 375-384.
- 7. Medicare Australia. Formula for calculating PIP payments. http://www.medicareaustralia.gov.au/providers/incentives_allowances/pip/calculating_payments.shtml (accessed May 2007).
- 8. Pink GH, Brown AD, Studer ML, et al. Pay-for-performance in publicly financed healthcare: some international experience and considerations for Canada. Healthc Pap 2006; 6: 8-26.
- 9. Guterman S, Serber MP. Enhancing value in Medicare: demonstrations and other initiatives to improve the program. New York: The Commonwealth Fund, January 2007.
- 10. Rosenthal MB, Landon BE, Normand S-LT, et al. Pay for performance in commercial HMOs. N Engl J Med 2006; 355: 1895-1902.
- 11. Ward M, Daniels SA, Walker GJ, Duckett S. Connecting funds with quality outcomes in health care: a blueprint for a Clinical Practice Improvement Payment. Aust Health Rev 2007; 31 (Suppl 1): S54-S58.
- 12. Berwick DM, DeParle NA, Eddy DM, et al. Paying for performance: Medicare should lead. Health Aff (Millwood) 2003; 22: 8-10.
- 13. Fisher ES. Paying for performance — risks and recommendations. N Engl J Med 2006; 355: 1845-1847.
- 14. Campbell NC, Murray E, Darbyshire J, et al. Designing and evaluating complex interventions to improve health care. BMJ 2007; 334: 455-459.
- 15. Petersen LA, Woodard LD, Urech T, et al. Does pay-for-performance improve the quality of health care? Ann Intern Med 2006; 145: 265-272.
- 16. Baker G, Carter B. Provider Pay-for-Performance Programs: 2004 national study results. San Francisco, Calif: Medvantage, 2005. http://www.medvantage.com/Pdf/MV_2004_P4P_National_Study_Results-Exec_Summary.pdf (accessed Dec 2006).
- 17. Galvin R. Pay-for-performance: too much of a good thing? A conversation with Martin Roland. Health Aff (Millwood) 2006; 25: w412-w419.
- 18. Norton EC. Incentives regulation of nursing homes. J Health Econ 1992; 11: 105-128.
- 19. Nahra TA, Reiter KL, Hirth RA, et al. Cost-effectiveness of hospital pay-for-performance incentives. Med Care Res Rev 2006; 63 (1 Suppl): 49S-72S.
- 20. Curtin K, Beckman H, Pankow G, et al. Return on investment in pay for performance: a diabetes case study. J Healthc Manag 2006; 51: 365-374.
- 21. Institute of Medicine. Unequal treatment confronting racial and ethnic disparities in health care. Washington, DC: National Academy Press, 2002.
- 22. Pham HH, Schrag D, O’Malley AS, et al. Care patterns in Medicare and their implications for pay for performance. N Engl J Med 2007; 356: 1130-1139.
- 23. Grimshaw JM, Thomas RE, MacLennan G, et al. Effectiveness and efficiency of guideline dissemination and implementation strategies. Health Technol Assess 2004; 8: iii-iv, 1-72.
- 24. Goldfarb S. The utility of decision support, clinical guidelines, and financial incentives as tools to achieve improved clinical performance. Jt Comm J Qual Improv 1999; 25: 137-144.
- 25. Dudley RA, Frolich A, Robinowitz DL, et al. Strategies to support quality-based purchasing: a review of the evidence. Rockville, Md: Agency for Healthcare Research and Quality, 2004. (Technical Review 10, AHRQ publication No. 04-0057.)
- 26. Werner RM, Bradlow ET. Relationship between Medicare’s hospital compare performance measures and mortality rates. JAMA 2006; 296: 2694-2702.
- 27. Hofer TP, Hayward RA, Greenfield S, et al. The unreliability of individual physician “report cards” for assessing the costs and quality of care of a chronic disease. JAMA 1999; 281: 2098-2105.
- 28. Kindig DA. A pay-for-population health performance system. JAMA 2006; 296: 2611-2613.
- 29. Pine M, Jordan HS, Elixhauser A, et al. Enhancement of claims data to improve risk adjustment of hospital mortality. JAMA 2007; 297: 71-76.
- 30. Nolan T, Berwick DM. All-or-none measurement raises the bar on performance. JAMA 2006; 295: 1168-1170.
- 31. Fairbrother G, Hanson KL, Friedman S, Butts GC. The impact of physician bonuses, enhanced fees, and feedback on childhood immunisation rates. Am J Pub Health 1999; 89: 171-175.
- 32. Rosenthal MB, Frank RG, Li Z, Epstein AM. Early experience with pay-for-performance. From concept to practice. JAMA 2005; 294: 1788-1793.
- 33. Boyd CM, Darer J, Boult C, et al. Clinical practice guidelines and quality of care for older patients with multiple comorbid diseases: implications for pay for performance. JAMA 2005; 294: 716-724.
- 34. Conrad DA, Saver BG, Court B, Heath S. Paying physicians for quality: evidence and themes from the field. Jt Comm J Qual Patient Saf 2006; 32: 443-451.
- 35. Trude S, Au M, Christianson JB. Health plan pay-for-performance strategies. Am J Manag Care 2006; 12: 537-542.
- 36. Teleki SS, Damberg CL, Pham C, Berry SH. Will financial incentives stimulate quality improvement? Reactions from frontline physicians. Am J Med Qual 2006; 21: 367-374.
- 37. Rosenthal MB, Dudley RA. Pay-for-performance. Will the latest payment trend improve care? JAMA 2007; 297: 740-744.
Publication of your online response is subject to the Medical Journal of Australia's editorial discretion. You will be notified by email within five working days should your response be accepted.