Health Care

Pay For Performance: Why You Should Care (Part 1 of 3)

Published October 16, 2009 @ 07:00AM PT

Money

Part 1: What Is It?

Earlier this year, amid all the yelling, name calling and finger-pointing, there was a small quiet force moving through US healthcare. It was the early adopter crowd of doctors, hospitals and health systems, girding up to become providers of coordinated, quality, and evidence-based care. I called this little-noticed movement the Silent Revolution. That loud screech I'm now hearing is the revolution reaching the mainstream.

We’ll get to the noise in Part 3 of this three-part series. First, today we’ll dig into what Pay For Performance (P4P) actually is, and in Part 2 we’ll look at how it can empower you as a patient.

Coordinated, quality, evidence-based: that describes true patient-centered care, and it’s a direct outgrowth of Harvard Business Professor Regina Herzlinger’s “focused factory” model from a few years ago. Instead of offering disjointed bits and pieces of critical healthcare services (often mistaken for the “best healthcare in the world”) focused factories aim for end-to-end coordinated care. For example, in a focused diabetes factory an aligned group of providers would offer ophthalmology (eyes), cardiology (heart), nephrology (kidneys), dermatology, neurology, and exercise physiology treatment.

No one has gotten that far yet, but Vermont’s Blueprint for Health program is leading the way in primary care. Blueprint aims to reach patients with chronic conditions like asthma, diabetes, and heart disease, and keep them healthier by 1) teaching them how to manage their conditions, and 2) monitoring them. The objective is to head off ER visits, hospitalizations, and expensive procedures. It targets the heart of healthcare spending, 78% of which goes to treat chronic conditions. And unlike prior disease management attempts, it’s not all outsourced.

But why would they try to keep patients healthy when they get paid for treating sick ones? And why on earth would Tenet Healthcare, a symbol of capitalistic healthcare fraud, reconfigure its 49 hospitals to only offer the 5-8 services that they do very well? Instead of offering every general service like the competitor down the street (remember, the more care Tenet provides, the more it gets paid), Tenet’s goal is to cover only those in-demand services for which it has a market-specific competitive quality advantage. Obviously some replication in healthcare is a good thing. We can’t have a hospital that refuses to treat a heart attack or a stroke. But every one doesn’t need to offer the exact same lengthy menu of services. Doctors specialize; so can hospitals. With focus comes excellence.

But back to that sticky payment issue. In our current fee-for-service healthcare reimbursement model, providers would be voluntarily cutting their pay to keep patients well. I’m hearing a no. Enter P4P. Blueprint is paid for by Vermont’s Department of Health, three major private insurers, and Medicaid. And the better providers do at keeping patients healthy, the more they get paid. Using quality measurements from the National Committee for Quality Assurance, good care and outcomes (less ER visits, for example) are rewarded with bonuses. Think of it as Bill Gates’ executive bonus plan, only Bill would be rewarded for keeping you healthy, not fattening your portfolio.

It’s going mainstream, too. Vermont’s Blueprint is the model for Medicare’s pilot P4P program, which is embedded in reform legislation (it’s flown under the radar of the public plan ruckus.) So even if little on the insurance side changes, the eventual spread of P4P promises to at least reform your actual care, and payment for that care. That’s money AND health in the bank.

But how can you use P4P to get better care now? Tune in next time for quality news you can really use.

Photo DarkGuru // CC BY 2.0

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Comments (30)

  1. Harold Lewis

    It's about time we talk about the foundations of better care! Great idea!

    Posted by Harold Lewis on 10/16/2009 @ 08:42AM PT

  2. Christine  Adams

    This is okay as long as doctors are not "punished" if they are following proper protocol and standards of care but the patients do not improve.  If this happens, there will be an incentive for doctors to not accept sicker people into their practices.  In Britain, doctors are paid for doing preventive care and best practices for managing chronice conditions.  Bonuses come if patients improve but doctors are not "punished" if patients do not get better.  We are living systems so there is no way to predict how each individual patient will respond to even the best of care.  Doctors can do all the right things and patients can be doing all the right things but still get sicker.

    Posted by Christine Adams on 10/16/2009 @ 09:03AM PT

  3. Harold Lewis

    If patients don't improve under "proper protocols and standards" then the doctors are practicing incorrectly and need to make changes to the protocols and standards.

    Successful outcomes from updated and corrected protocols and standards ought to be rewarded. Not getting a bonus or more pay is not punishment. I don't see Blueprint penalizing anyone.

    If a doctor turns down the challenges of healing and avoids sick people in order to get bonuses, then his motivation is not for people but for his own wallet. It is for this type of doctor and attitude toward medical practice that insurance companies are designed - benefit everyone more and more except the patient.

    It's time we get past that

     

     

    Posted by Harold Lewis on 10/16/2009 @ 09:38AM PT

  4. CherokeeGirl  for Change

    I don't see how doctors would be punished. If so, that would open the door to controlling our very lives and lifestyles, removing our free will, so they could force good outcomes. No more soft drinks, no more living it up with that scotch on Friday nights. We have to take responsibility for our own health, use moderations, and not get punished for our lifestyles.

    Doctors are already being punished. You should see what they have to go through with the billing and appealing claims to the insurance companies. Patients are punished by not being able to get the care they need because there's an insurance guy between them and their doctors.

    Posted by CherokeeGirl for Change on 10/16/2009 @ 10:02AM PT

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  6. CherokeeGirl  for Change

    Gillian, I sure hope the powers that be have this information while writing the legislation. It really is crucial to reform.

    Posted by CherokeeGirl for Change on 10/16/2009 @ 10:03AM PT

  7. Jennifer Perugini

    The doctors are unable to treat patients in a manner that is best due to the managed care aspect of insurance groups.  Treatment protocol is set and drs do get penalized financially if they over prescribe diagnostics, or prescribe the best asthma medication before trying 3 different meds.  Frustrating. 

    Treating the whole person is novel or back to the family dr model.

    Posted by Jennifer Perugini on 10/16/2009 @ 10:06AM PT

  8. CherokeeGirl  for Change

    I was in healthcare when managed care and utilization review started. To be honest, I never saw care being "managed" for the benefit of the patient. It did make it harder for people to get certain procedures, too. I'm not sure what good that did.

    Posted by CherokeeGirl for Change on 10/16/2009 @ 10:14AM PT

  9. Harold Lewis

    Then it sounds like doctors ought to be in there pitching heavily against insurance companies and should welcome results-oriented care.

     

    Posted by Harold Lewis on 10/16/2009 @ 10:19AM PT

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  11. Jemma Alarcon

    Exciting! A wellness vs. disease action-based approach.

    Posted by Jemma Alarcon on 10/16/2009 @ 11:26AM PT

  12. Dee Gardner

    Jemma,

    Thanks for the very intersting article.  I have studied and implemented p4p systems for 20 years.  I have often thought p4p could be one of the best ways to cut US healthcare costs.  I am hoping it works and things improved.  All too often p4p is mis managed, which kills it's effectiveness.  I am looking forward to reading the next part.

    Posted by Dee Gardner on 10/16/2009 @ 10:24PM PT

  13. M Arnest

    I'm worried about the separation of skilled physicians versus average or below par doctors and my health care..

    Several doctors already don't accept medicare patients without secondary insurance. (apparently they get only about 8-10 dollars reimbursement).  Will the good doctors, except those with integrity, avoid patients with government paid health care?  Will all of us get the left overs and a gap be generated between the haves and the have not's?

    Hopefully congress does something to address this.  So many physicians today are rejecting medicare.  Will the privately insured become elitists in the new health care legislation?

    Posted by M Arnest on 10/18/2009 @ 04:07PM PT

  14. CherokeeGirl  for Change

    I've been hearing about that. Some seniors have trouble when switching doctors, because docs only need to accept a certain amount of medicare patients. So, it is hard to switch. But they have to accept medicare if they haven't met their quota of medicare patients. It must be the low reimburesement rates that are making them reluctant to accept more than their quota. We need to fix Medicare Part D (a good example of poor legislation that now has to be fixed) and we need to fix Medicare so that it pays proper rates.

    Posted by CherokeeGirl for Change on 10/20/2009 @ 10:52AM PT

  15. Harold Lewis

    "we need to fix Medicare so that it pays proper rates"

    Well, the amounts being paid by Medicare exceed those for the same services in the EU - an economy larger than ours. It's just as likely that the reimburement is higher than what we can afford as it is too low for doctors' desire for compensation.

    Resources are limited but desires are not. Pricing has to respond to available resources if health care is to be made available to everyone.

    Part D is a disgrace. We need to find a tested model for controlling pharma costs on a national level, for all patients.

    Posted by Harold Lewis on 10/20/2009 @ 11:45AM PT

  16. CherokeeGirl  for Change

    Good point, Harold. We should not increase rates before reforming how care is delivered. Funny thing is, my healthcare buddies aren't returning my calls.

    I'm guessing it's a problem with equipment purchasing and just streamlining business practices, besides the obvious over-testing thing. It's a conundrum.

    It would be so easy to just model after a working system and just reform everyting, than to do it bit by bit. Sigh, do we need an "agency" to analyse, review and recommend? I hate to recommend another government agency, but what else can be done? The doctors won't reform their own practices unless pushed to do so.

    Posted by CherokeeGirl for Change on 10/20/2009 @ 12:12PM PT

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  17. Harold Lewis

    I think there are progressive doctors being silenced. They want change and are willing to change but are shackled by compensation restrictions and muscled out of the media.

    It's like independent politics. You can sit in a room full of good ideas, contact the press, and then see, in the next days paper, an opinion piece under a reporter's byline that was written by a Republican or Democrat press agent.

    Congress has been given their marching orders and working parameters. There, too, I think there are many who know that reform isn't what it needs to be. I wish there was a way to encourage them.

    I agree that another agency wasting time to investigate what every other industrialized nation already has is really frustrating. The insurers and providers emulate each other, you'd think the people would want their government to take that cue.

     

    Posted by Harold Lewis on 10/20/2009 @ 12:54PM PT

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  19. Harold Lewis

    The gap between haves and have nots already exists and the problem you describe is not one of government vs. non-governmental plans.It's a question of turf battles over a divided populace.

    One of the penalties we've paid for managed care is the concept of a network. Many people who've changed coverage or had an employer change coverage also saw their provider networks change. Many people are forced to change doctors or pay out of network fees when they change coverage.

    My PCP relates it as a dance between himself and the insurer as to whether they want him in network and he wants to become part of yet another network. Congress should definitely work against this idea of in and out of network in terms of coverage (and for simplification of claims processing.) But the bills do not propose any such thing and organized physicians will likely seek to squash a robust public option by refusing to participate.

    I'm curious as to the services for which doctors are receiving such low reimbursement as you state. Any examples? Are we talking Medicare or Medicaid?

    In any event, the fragmentation of the population into customers of this insurer or that one, poor, employed, unemployed, or elderly for the purposes of determining the cost and coverage of care is at the root of the problem. We have a common cause, a common need for care services, yet no such organization as the AMA or AHIP to work Washington on our behalf.

    All we have are the representatives that these lobbies are working against us. They like it that way, several million individuals, one-on-one, against their collective business interests. Hence, a mandate for every individual to buy but not one for every provider to sell.

    So long as we allow lobbies, our representatives, our government's programs, our emlpoyers, insurers, and providers divide us and wave some imaginary issue of individual "choice" in our faces, they will profit and we will lose. Under a single-payer, all this separation goes away and the only choice a provider has is to practice or not practice - separate the good doctors, the ones with an interest in patients as people in need, from the profit-seekers.

    Posted by Harold Lewis on 10/19/2009 @ 08:15AM PT

  20. M Arnest

    I understand Harold.  My concern is the increase in the gap size between the haves and have not's with elimination of the insured middle class.  If government health care  proceeds as medicare, we need guarantees that the insurance will be taken by doctors.  I don't believe the issue is addressed.

    Posted by M Arnest on 10/19/2009 @ 01:10PM PT

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  21. Gillian Hubble

    Check out http://healthcare.change.org/blog/view/whats_next_five_moves_to_watch_in_healthcare_reform for the Medicare SGR repeal and Medicare +5% proposals. While no guarantee doctors would accept public plan patients (right now some doctors refuse to take any insurance at all), these proposals do sweeten the deal for doctors treating both Medicare and public plan patients.

    Posted by Gillian Hubble on 10/19/2009 @ 03:35PM PT

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  22. Harold Lewis

    M.

    As I noted "the bills do not propose any such thing and organized physicians will likely seek to squash a robust public option by refusing to participate." There is no requirement in any of the bills that doctors accept any insurance, public or otherwise. Nor is there a provision that insurers compensate the physician of the patients choosing - "a mandate for every individual to buy but not one for every provider to sell."

    Physician income will decline if enough peoples' coverage is excluded. If insured "haves" become insured "have nots" by selecting a public insurance plan, it will not be because they selected a public plan but because the rules which govern compensation and participation remain unchanged. To that extent, the elitism you question is already in place.

    All plans do not open up all physician possibilities to all people and nothing trumps cold cash in our system.

    Congress is not protecting us in this regard. However, if private insurance is to be protected (as with all the bills on the table) scuttling the negotiated networks and provider restrictions is not possible. This is still the going theory for insurance-based cost containment and a basis for competition among insurers. Our division is their strength and Congress is not even offering to address this on our behalf.

    I'm still curious about the $8-$10 reimbursement and would like examples.

     

    Posted by Harold Lewis on 10/20/2009 @ 08:51AM PT

  23. M Arnest

    Harold,

    I understand that the reimbursement rate seems low, but that is what I was told when I tried to use  my care plan. I've heard that reimbursement would go up 5% for medicare, but what is that to a doctor?

    I don't want to be bumped or demeaned because of the new health bare bill and enrollment in the new system. I would hate to see us all pay more for worse care.

    Someone that has their union supported nice health care package will be ahead of the line.  I will get the left overs!

    Right now I only pay part of a premium for an extra package through work.  With this gone, and it will be, where will I turn?

    The government will just screw things up unless they do it right.  They've done it before!

    The congress has to address an issue that widens the chasm and will create a horror story for more of it's people!

    PS.  Through the Internet, I've discovered medicare reimbursement is different depending on the area where people live.  There are several articles available with a search, just watch who writes them:)  Maybe you live in a good area, maybe not.  I wish you the best!

    Posted by M Arnest on 10/21/2009 @ 03:42AM PT

  24. Harold Lewis

    The bills in Congress do nothing to protect any person, regardless of the source of their insurance, from losing a physician or being kicked from one network to another.

    It may even exacerbate the situation by adding another, lower-paying insurer, the public plan, into the mix.

    However, since our expenditures on health care are not based on utilization (other OECD coutries pay about half per capita and receive more services), it calls into question whether we have a problem covering costs and providing health care workers/ providers with a living and enought to sustain facility operation or whether we're simply failing to meet their desired price.

    Given the weight of evidence in other industrialized nations, I'd say it's a question of desired price and profit, not Medicare paying too little for the services.

    If Congress is going to mandate that everyone buy coverage, as the insurers want, then it would be only right that all insurers reimburse all providers and providers be mandated to accept whatever insurance their patients have.

    Posted by Harold Lewis on 10/21/2009 @ 09:15AM PT

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  26. Jennifer Perugini

    Insurance dictating patient care must stop.  http://www.smartmoney.com/spending/deals/10-things-your-hmo-doctor-wont-tell-you-3924/?hpadref=1

     HMO's, (health maintenance organization ) demand the doctors treat patients so costs to insurance companies (HMOs) are minimal. Patient's receive as little medical care as possible.

    Under traditional health insurance plans (where the insurance company holds the reins on patient care approving and denying care), the doctor treats patients and tries to ensure his or her recovery. HOWEVER, the doctor must still NOT engage in UNECESSARY patient care - the insurance plan pays the bills after deductibles and co-pays are met. The doctor under traditional health insurance plans does not have freedom to fully diagnose and treat the patient, due to restrictions placed on care by insurance company.  Many people get sicker, are denied tests, medicines, treatments and even die as the insurance companies "manage"  the paper work and disallow care. 

    HMO's pay a given doctor, called the Primary Care Physician (DOCTOR) a set fee per patient per month to "MANAGE" their overall medical care. This fee is small - $1.50 to $10.50 - per patient per month. The DOCTOR has to have lots of patients on his patient rolls to meet his overhead. The DOCTOR receives $1.50 per patient per month (if $1.50 is the set fee) no matter how often he treats the patient, and no matter what procedures the DOCTOR uses on the patient. So, the DOCTOR receives $1.50 for the healthy patient he does not see, and also receives $1.50 for the cancer-stricken patient who needs nearly constant care.

    Doctors, profit when patients aren't seen nor treated. Under HMOs, doctors only show profit for themselves when they never or very rarely see patients

    HMOs often will not pay for a referral to a specialist. HMOs also charge the DOCTOR if the patient's specialist care exceeds a set minimum or if the doctor refers TOO many patients to specialists. HMOs decide to whom a DOCTOR can refer a patient for a given specialty, and the specialists are also under the same set-fee program as the DOCTOR's.

    Posted by Jennifer Perugini on 10/19/2009 @ 11:41AM PT

  27. CherokeeGirl  for Change

    Managed care is such a hodge podge of backroom agreements. Thanks for explaining, and I actually worked for a Utilization Review doctor, and I'm still confused. I think it's clear it never benefited the patient, just the doctors and insurance companies.

    Posted by CherokeeGirl for Change on 10/20/2009 @ 11:05AM PT

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  29. Jennifer Perugini

    http://www.madashelldoctors.com/

    These Doctors are speaking out across the country.  They are MAD ! 

    Posted by Jennifer Perugini on 10/20/2009 @ 03:12PM PT

  30. CherokeeGirl  for Change

    Love those docs! Wish Obama would meet w/them.

    Posted by CherokeeGirl for Change on 10/20/2009 @ 03:22PM PT

  31. Harold Lewis

    Been blogging with them for months. They're great!

    Posted by Harold Lewis on 10/21/2009 @ 09:04AM PT

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  33. betty mapp

    hi!  i thought i joined this org. but every time a note pops up i'm not a member. i filled in all fields. what do i do to become a member? betty boop mapp. if there is a charge for this, i can't afford it. let me know how to unsubscribe. thank you  

    Posted by betty mapp on 10/22/2009 @ 10:18PM PT

  34. CherokeeGirl  for Change

    hi betty, you are a member if you are able to post on this site. It sets a cookie so you don't have to log in everytime you visit, which I really like, personally. There is no charge and it's a great way to make an impact.

    Posted by CherokeeGirl for Change on 10/23/2009 @ 09:44AM PT

  35. Gillian Hubble

    Betty--the issue may be that you aren't signed in when you want to post a comment. As CherokeeGirl said, if you can post you are a member. Just make sure your browser is set to allow Change.org to use cookies.

    Posted by Gillian Hubble on 10/23/2009 @ 10:28AM PT

  36. Harold Lewis

    Betty,

    Ideas are free. We'd never charge to inflict them on each other. Welcome aboard!

    Posted by Harold Lewis on 10/23/2009 @ 10:35AM PT

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Author
Gillian Hubble

Gillian Hubble is owner of Actively Fused, a consulting and healthcare advocacy firm, and a partner in KDG, a business development firm.

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