Is P4P Paying off?

The Hospitalist. 2007 October;2007(10):

October 1, 2007|The Hospitalist

Pay for performance (P4P) has been the hottest topic among physicians for quite a while. Perhaps the time has come to ask: Is it worth the hype?

“In terms of organized pay-for-performance programs, we’re at the very beginning of seeing pay for performance in action,” says Patrick J. Torcson, MD, MMM, FACP, member of SHM’s Public Policy Committee and director of hospital medicine at St. Tammany Parish Hospital in Covington, La.

Although P4P is still in its infancy, one major demonstration trial is complete, and researchers have begun to mine results for indications of success.

The largest national P4P trial to date is the Centers for Medicare and Medicaid (CMS)/Premier Hospital Quality Incentive Demonstration Project, which involved more than 260 hospitals reporting on 34 quality measures from October 2003 through September 2006. The measures were grouped in five clinical areas: acute myocardial infarction, heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement.

Hospitals in the top 10% for each of the quality measures received a 2% bonus of their Medicare payments for the measured condition; hospitals in the top 20% received a 1% bonus; and hospitals in the bottom 20% returned 1% to 2% of their diagnosis-related group (DRG) payments.

Policy Points

Cuts Proposed for CMS Physician Payments

On July 2, CMS issued a proposed rule that would slash Medicare payments to physicians in 2008 by nearly 10%. CMS projects that it will pay $58.9 billion to 900,000 physicians and other healthcare professionals next year.

SHM is working to block this cut, as well as to urge CMS to replace the sustainable growth rate formula (SGR) with a stable, predictable annual update based on the Medicare economic index, which reflects inflation in the healthcare sector.

PQRI Participation Still Open

Although the Physician Quality Reporting Initiative began July 1, you can still climb on board. Participation can start at any time during this P4P project, which ends Dec. 31, and there’s no application necessary. For more information, visit the SHM Web site at www.hospitalmedicine.org.—JJ

CMS has paid $17.55 million in incentives to the top-tier, participating hospitals and reported savings of $1.4 billion in terms of avoidable deaths, complications and readmissions prevented, and shortened lengths of stay.

As for quality improvements, results from the first two years of the demonstration project show proven improvement across all five clinical focus areas. The average improvement of the composite quality scores (CQS), an aggregate of all quality measures within each clinical area, in the project’s second year was 6.7%, for total gains of 11.8% over the project’s first two years.

The CQS improved significantly between the start date and the end of the second year in all five clinical focus areas:

From 87.5% to 94.4% for patients with acute myocardial infarction;
From 64.5% to 82.4% for patients with heart failure;
From 69.3% to 85.8% for patients with community acquired pneumonia;
From 84.8% to 93.8% for patients with coronary artery bypass graft; and
From 84.6% to 93.4% for patients with hip and knee replacement.

“In many circles, this is proof positive that pay for performance works,” Dr. Torcson says of the results of the Premier demo. “However, this was hospital-level P4P and involves a different methodology than physician-level P4P. I don’t think it’s safe or accurate to extrapolate these results.”

What the Research Says

Various researchers have examined available P4P data to see if incentives improve care.

Recent studies include one led by hospitalist Peter Lindenauer, MD, MSc, FACP, medical director, clinical and quality informatics, Baystate Health in Springfield, Mass., and assistant professor of medicine at Tufts University School of Medicine in Boston.1 Dr. Lindenauer and his colleagues examined data from the CMS data warehouse gathered as part of the Hospital Quality Alliance (Hospital Compare) project. Specifically, they compared P4P CMS Premier hospitals with 408 hospitals that participated only in public reporting, with no compensation.