Pay-For-Performance In Health Care

Pay-for-performance payment model – healthcare payment systems that offer financial rewards to providers who achieve, improve or excel their performance on specified quality of care and cost measures (HealthCare Incentives Improvement Institute, N.D.)

First implemented in 1985 by Aetna (previously U.S. Healthcare), P4P programs were used to reward top performers and improve outcomes (Bruno, 2012). The incentives were meant to improve the quality of patient care by basing incentives on patient outcomes. Conversely, fee-for-service reimbursements are based on the treatments and set limits on the amount reimbursed for services. Because of these limits, incentives for use of pharmaceuticals and non-invasive procedures can impact how physicians practice.

It is commonly believed that the method of physician remunerations affects their professional behavior. As a result, payment systems are therefore manipulated in attempts to achieve policy objectives with the primary aim to improve quality of care, contain cost and maintain recruitment of human resources in underserved areas. (2,1)

Review of the literature identifies the issue of fair pay for similar work has been an issue for some time. According to Grey (2013, par. 7) the pay parity for NP and PA became an issue when two insurance carriers dropped reimbursing rates for NP and PA by 50%. On March 1. 2013 NP and Physician Assistants (PA) who run private practices reported they were struggling to maintain their business because of the lower rates paid by insurers (Grey, 2013, par. 8). Mccarger (2017, p. 15) discusses how payment parity is strongly opposed by medicine, and is primarily historical in nature. Advanced practice nurses still need to justify their value in a historically hierarchical framework of health care where the physician is the chief authority

These mandates also require that some establishments provide customers with a good outcome and experience while at their facilities. There are also incentives provided to doctors who correctly diagnose their patients for the very first time reducing the rates of readmission this also applied to those that provided outstanding follow up care for patients “The new law provides incentives for physicians to join together to form “Accountable Care Organizations.” These groups allow doctors to better coordinate patient care and improve the quality, help prevent disease and illness and reduce unnecessary hospital admissions. If Accountable Care Organizations provide high quality care and reduce costs to the health care system, they can keep some of the money that they have helped save. Effective January 1, 2012” ( HHS>GOV).

The fragmented and misaligned state of the U.S. health care system has become a catalyst for payment and delivery system reforms. Traditional fee-for service (FFS) payment structures incentivize high volume rather than high quality care, and lead to the suboptimal provision of medical services across the disjointed provider landscape. Despite various attempts to improve care delivery, health care costs continue to rise. The Accountable Care Organization (ACO) model seeks to reverse these trends by promoting a simultaneous restructure of the payment and delivery systems to incentivize higher quality, lower cost care.

This article provides background on previous financial models used such as fee-for-service and the potential costs between practitioners. The article states that in the fee-for-service model of payment many physician operate disjointed care and often rely on patient volume rather than need. It attempts to create a strategy to change physician behavior and incentivize them to work as a team focused on a set of guidelines for a specific episode of care. The article is largely important as to give background information on bundled payments that are already currently happening with the pilot programs brought forth for hospital related health care services. One program is the Medicare Acute Care Episode (ACE) Demonstration for Orthopedic and Cardiovascular

With new reforms being put in place under the Affordable Care Act such as the pay-for-performance (P4P) also known as “value-based purchasing,” which is intended to help provide maintain and efficient programs to improve health care cost. Healthcare providers, hospitals, medical groups, and physicians are offered incentives for meeting certain performance goals; it also fines for increased costs and medical errors such as incorrect medication or dosages. In two different studies quality of care was found to have improved at P4P hospitals compared to non-P4P hospitals Lindenauer et al. (2007) and Grossbart (2006). However, a study by Werner et al.(2011) found no continuing benefits in quality of care. One measure being advocated for is the Hospital Readmissions Reduction Program (HRRP) to prevent hospital readmissions as a way to improve the quality of care and at the same time cut cost. If patients are readmitted within 30 days after discharges due to conditions like acute myocardial infarction (AMI), heart failure, and pneumonia, fines can be levied such as 1 percent of Medicare payments. Others include the Hospital Value-Based Purchasing (VBP) is based on how well the hospital performs compared to other hospitals or the improvement of their own performance compared to a baseline time. The goal is to encourage better outcomes for patients and improve experience during hospital stays. And the Hospital-Acquired Condition (HAC) Reduction Program motivates hospitals to increase the safety of it patients by cut the number of hospital-acquired conditions and patient safety (Medicare.gov, n.d.) (Kruse, Polsky, Stuart, & Werner, 2012)(Gu et al.,

These new models aim to transform traditional fee-for-service (FFS) payments that reward episodic care into models that reward the delivery of comprehensive primary care (Edwards et al., 2014). The Belvoir Primary Clinic will seek to take advantage of all potential reimbursement methods such as the Enhanced Fee-for-service (EFFS) model which will allow the clinic to receive augmented payments due to its PCMH status (Edwards et al., 2014). The practice can also qualify for additional payments by using PCMH specific codes to bill for non-visit related care such as care coordination and transition support (Edwards et al., 2014; Gray & Aronvich, 2016). Furthermore, the practice can also receive incentives through value-based and pay-for-performance (P4P) programs by meeting performance measures and utilization goals (Edwards et al., 2014).

Space prevents a full breakdown of the differences between fee-for-service and managed care. There are important characteristics of each that affect how trade-offs between quality and cost are made. For fee-for-service: There is no “defined population” for which the insurance company is responsible. Connections with the system are initiated by the patients. The main focus is on treating sick patients. Neither physicians nor insurance companies are responsible for providing care beyond what is specified when patients seek care (Eddy, 1997). The responsibility of the insurance company is to pay the bills. Importantly, the insurance company is not responsible for the overall health of its subscribers or for the quality of care delivered by individual physicians. Physicians are left to decide what care their patients should receive.

Pay for performance has been a topic debated for many years in a wide range of professional settings as a way to increase employee productivity by basing their pay on the quality of the employee’s performance. Pay for Performance used within the medical community is defined as a payment system that offers financial rewards to medical professionals who meet or exceed specified benchmarks (“Pay-For”, 2009). Most approaches adjust the payments to physicians and hospitals on the basis of

The pay for performance model encourages physicians and hospitals to have a clear and accurate picture of what is required and expected of them. This is often done by setting clear concise goals and measuring care that was provided. Researchers believe that the factors that are to be measured need to be simple. Making them simple

Thanks for your informative post, I agree, pay for performance is a reimbursement method aimed at improving the experiences of patients at various health institutions. This method as you mentioned is becoming popular among health care policymakers and health care insurers. it is a method based on incentive paid by health care insurers to providers to encourage the overall improvement of providers’ healthcare services to their patients . The pay for performance is considering a method of reimbursement that has shifted much of the financial risks to the providers of health care. The shift in risks to providers could be a double-edged sword. For one, the method can be credited for allowing physicians accountability for costs containment and wellbeing of their patients to be emphasized within the health arena. On the other hand, P4P could result in physicians enrolling patients with less complicated health problems in the practices, or it could lead to physicians avoiding healthcare facilities in poorer neighborhoods with many chronic ill patients. That said, researchers do not concur that the pay for

Under payment, an ideal healthcare system will have the challenge of delivering higher quality for lower costs. The system’s payment reform will involve a transition from fee-for-service to global from systems that are value-based important for the achievement of the overall healthcare goals. An ideal healthcare payment system will give a great deal of support to value-driven system of healthcare delivery (Kent, 2013). The fee-for-service payment system will be of great importance to the healthcare system as it will help control the costs of health care.

The positive outcomes that have resulted due to value base programs have caused the model to gain traction and ignite one of the largest changes in history in the health care marketplace. By linking reimbursements to service quality, insurers such as the Centers for Medicare and Medicaid Services have facilitated a massive leap forward in the performance of United States health care providers. This achievement is a considerable accomplishment in the face of an institution that has received reimbursement from insurers via a fee-for-service model during the last 75 years. Soon, valued based payment models will represent the norm as more insurers support initiatives such as shared savings program, integrated clinical care, and accountable care payment models.