Medicare Compliance & Reimbursement

Many physicians don't trust health plan-generated performance data.

Despite the enthusiasm surrounding pay-for-performance pilot programs in both the public and private sectors, an influential think-tank has revealed a P4P backlash involving quality measurement disparities and certain physician groups. Although many industry leaders believe P4P will play an integral role in the future of health care, others are pointing to the flaws that could make implementation impossible.

When the Center for Studying Health System Change performed its 2005 site visits to 12 nationally representative communities, HSC discovered that only two communities had "significant P4P programs." The other 10 communities had either minimal or no P4P programs targeting physicians, HSC reports.

"In the other 10 communities, where almost no physicians received quality-related payments to date, physician attitudes about P4P ranged from skeptical to hostile," HSC says. The two communities with P4P programs in use--Orange County, CA and Boston--"are early P4P adopters in part because many physicians in these sites are organized into large medical groups, integrated systems or independent practice associations," HSC surmises.

P4P Program Design Varies Too Much

Because of P4P programs' structures, few performance-based dollars are reaching physicians, HSC claims.This contributes to small physician practices' lack of support for P4P, because physicians view P4P initiatives as significant extra work in reporting and tracking quality measures in exchange for little or no extra money. The HSC has described the following as the main P4P program structures:

• Individual physicians receive bonuses for improved quality measures from their physician organizations, with no health plan involvement.

• Individual physicians receive payments from employers for improved performance.

• Medicare or individual health plans pay performance bonuses to physician organizations rather than to individual physicians. Physician organizations may then use the bonuses for quality enhancement or distribute the bonuses to member physicians.

• Health plans work together to coordinate payments to physician organizations for performance improvements.

As HSC learned from its site visit to Orange County, CA, medical directors are often more excited about P4P than frontline physicians. "Because payments come to medical groups rather than to individual physicians, medical groups have invested some P4P dollars in internal systems to improve performance and data collection, in addition to distributing the money to frontline physicians," HSC notes. Physicians may become more interested in P4P when they see the real bonus money. "Overall, Orange County shows that to gain physician acceptance, the first P (pay) in P4P is the key to success," the center adds.

Mistrust, Disputes Over 'Bonuses' Create P4P Barriers

Physicians' mistrust of health plan-generated performance data could widen the P4P program-implementation gap between small and large physician groups, HSC says. Large physician groups have the funds to produce their own quality data, as many have clinical IT capabilities, and to implement quality-enhancing processes. "Health plan executives affirmed that the money is going to larger and better-run medical groups and that smaller practices lack the infrastructure to make the program work," the center points out.

Health plan P4P programs often withhold about 10 percent of reimbursement, which plans pay to practices if they meet performance goals, physician leaders say. "[Physician leaders'] view is that additional money has not entered the reimbursement stream, a view disputed by at least one health plan," HSC notes.