Pay for Performance Essay

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.

In the past several years, there have been several changes in economic policy at federal and state levels. The two economic policies that present to be the most precedent for healthcare leaders with concern to facility reimbursement are the Affordable Care Act (ACA) and the switch from volume to value reimbursement. First, there is the ACA policy, which have affected healthcare facilities and their reimbursement methods. In fact, ever since this policy was implemented, provider reimbursement has started to decrease in terms of fee-for-service payments (The Common-Wealth Fund, 2015). In other words, the intention of this policy was to provide budget relief to the government payers as well as giving providers an incentive to provider patients with great quality of care.

They will now receive payments from the quality of care they provide to their patients. Those with higher based value will receive higher payments than their counterparts (Berenson 2010). I think this is very important because the healthcare system has been volume driven for so long that quality healthcare has been an issue for quite some time. In addition to value, this would definitely improve quality and efficiency needed for better patient outcomes.

Pay-for-performance programs are expected to expand across the United States health care in the near future, especially with the implementation of the Affordable Care Act. The pay-for-performance is going to continue to increase the quality of health care that the patient receives from their

The service-based pay structure provides significant motivation for healthcare providers to deliver as many services as possible, with little to no consideration of patient outcomes. Furthermore, this structure provides no incentive for certain key elements of healthcare such as patient education and care coordination, both of which have led to diminished costs and better outcomes for patients. I am of the opinion that very little quality improvement will take place if this pay-for-service model persists. The current transition from service-based pay to quality-based pay is definitely a move in the right

The payment incentives provided to healthcare providers under the PPACA will most likely lead to improved healthcare quality. In addition, reimbursement will shift from being based on quantity to being value-based which will in turn incentivize providers to provide higher quality care.

Besides, the financial incentives for hospitals and physicians that belong to ACOs, Jaffery & Golden 2013, asked and then answered the question “why would providers join this program? One reason is to prepare for the future”. Fee-for-service reimbursement, which has been how hospitals get paid for their services rely solely on the volume of patient seen without taking into consideration the quality of care provided. Payers today, such as government, commercial insurers, employers, and individual consumers are now requesting on value -based-payment, which consist of delivering the highest level of care at a lower cost. The volume based system even though the traditional way of how payments are made is not a viable long-term option (Jaffery and Golden, 2013, p.98).

In recent years, emphasis has been placed on improving the quality of health care services and the overall patient experience. Innovative measures are needed to meet these expectations, while also containing the rising costs of health care. The government has enacted new laws in attempts to provide incentives that base Medicare payments in part on quality. In fact, the Patient Protection and Affordable Care Act of 2010, requires the implementation of value-based purchasing (VBP), which bases Medicare reimbursement rates on the quality of care (Kennedy, Wetzel & Wright, 2013). Hospitals may experience a decrease in revenue initially, however, it is theorized that the increase of transparency and accountability will serve as an incentive for improvements in the overall quality of care provided in the United States.

The idea that the healthcare reimbursements should be linked to the quality outcomes and performance measures is central to the Patient Protection and Affordable Care Act. The legislation provides various reforms that either provide incentives to healthcare providers for better quality services and outcomes or reduce their payments if certain quality standards are unmet. This paper talks about the different reforms under PPACA, aimed at introducing payment variations based on quality of care such as, Hospital Value Based Purchasing (VBP) program, improvements to different quality reporting programs, payment adjustments for hospital acquired conditions (HAC), reduction of hospital readmission rates (HRRP), testing for

Value-Based Payments (VBP) is a tactic utilized by purchasers to encourage quality and the value of health care services (Health Care Incentives, 2017). Value-Based Payments offer financial incentives to doctors, hospitals, medical groups, and health care providers (Webb, 2015). The incentive is to provide better care for their patients and to focus on the quality of the care they are providing rather than the number of people they treat. This payment model is being used as a way to keep DSRIP sustainable (NYSDOH, 2015). The VBP Model offers a roadmap, which outlines a five year plan to attaining inclusive payment reform; which includes a shift to 80% VBP through Medicaid managed care plans (The Commonwealth Fund, 2017). This payment reform should be accomplished by the end of DSRIP enactment period of five years (The Commonwealth Fund, 2017).

Physicians are used to operating under a fee for service payment method, which means they are paid separately for each service they perform. ACOs do not necessarily go away with this mentality. Instead, they do follow this method but offer incentive such as bonuses when fees are kept down. The focus is on prevention of disease. Each physician and healthcare system has benchmarks they must meet for bonus eligibility. In short, physicians are paid more to keep their patients out of the hospital. ACOs are also watched to be sure they are saving money. If an ACO does not meet performance benchmarks, they may be penalized with a fee (Gold, 2015).

I think if the VA or any government ran healthcare organization would adapt a pay-for-performance compensation program, the culture would change, because the employees would be more motivated to perform well; as a result, there will be an increase of quality of care provided to patients which, in return, would inhere to better medical outcomes.

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

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.