Pay For Performance: The Train Has Left the Station, But Will It Stay On the Tracks?

There has been a bit of discussion of the pay for performance issue on several other health care blogs. Retired Doc's Thoughts kicked it off by highlighting discussion of the issue in Internal Medicine World Report by Philip Alper. Both Alper and Retired Doc were concerned about the American College of Physicians (ACP) new partnership with, among others, commercial managed care in the Ambulatory Care Quality Alliance (AQA). Retired Doc asked,

Whose interests will ACP represent as they swim with the sharks of the insurance industry?

Next to take up the topic was Medical Rants,

The ACP leadership has met with insurers and legislators. The quality train has left the station. Too many “experts” have espoused the value of quality measures for the ACP to ignore this movement.
Nonetheless, whether the ACP (or any organization) participates, we will have pay for performance. The ACP has chosen to participate in hopes of controlling the runaway train.

I reluctantly concur that physicians must engage with the proponents of pay-for-performance. But there are a number of important issues they will have to bring up if this movement is to have any net benefit for patients, and at least not heap further misery on physicians.

• How will pay-for-performance guard against perverse incentives? - As someone who has done research in the area, I am very concerned that outcome-based quality measures are likely to lead to perverse incentives. Bad outcomes occur to sicker patients, and we do not yet have reliable methods to control for how sick patients are when measuring outcomes. Thus, outcome-based performance measures are likely to penalize physicians who care for the sickest patients. Although many proposed pay-for-performance measures are "evidence-based" process measures, they too have the potential to create perverse incentives. Putting all the emphasis on a few process measures may distract physicians from doing other things for patients that may have a greater impact on their health. I am not aware of any studies that have tested to see whether stressing such measures has a negative effect on other aspects of health care quality or patient outcomes (but if you do not study it, you will not be able to find an effect.)
• Is pay-for-performance really about quality, or minimizing cost to commercial managed care organizations? - For example, the programs lately pushed by UnitedHealth to rate physicians(like this one, proposed for Kansas City) seem to weight quality of care and "efficiency" equally. "Efficiency" here means saving money for UnitedHealth (presumably so the company will have even more money to pay lavish executive compensation, as documented here and here.) Rewarding "efficiency" in this way tells physicians that they are valued most when they do the least for patients. Having primary care physicians do less could let UnitedHealth cut its costs further without having to address the uncomfortable issue of how well it reimburses for high-tech devices and hospitalizations (e.g. regarding the latter, see this).
• Why is all the emphasis on ambulatory care? - There is ample evidence that primary care physicians have been inordinately stressed by various methods used to control costs by the government and managed care. As we have discussed before, the result is fewer physicians going into primary care. Yet the AQA will deal only with "ambulatory care," and most of the current set of proposed measures would mainly impact primary care. There is no reason to believe that primary care doctors currently are less competent practitioners that specialists, or cause more quality problems than other people involved in health care. Why add to their stress while ignoring quality problems in other parts of the health care system? (For example, isn't producing implantable cardiac defibrillators [ICDs] that are liable to short-circuit and fail, and withholding this information from physicians and the public for years, as Guidant did, not a major quality problem? Why aren't managed care organizations, who may have paid $25,000 for each potentially faulty ICD, concerned about this aspect of quality?)

Finally, let me address the issue that the "train has left the station." Since health care has been dominated more and more by people from the business world, we have heard about a lot of trains that have left the station. Many of them derailed. For example, remember:

• Large, vertically-integrated health care systems - These were all the rage in the mid-1990s. For example, a New England Journal of Medicine Sounding Board article in 1994 proclaimed, "many academic medical centers are developing complex organizations of physicians and large health networks that provide managed care to large groups of people." "The rationale is that a surplus of revenues from clinical care provided by hospitals and professionals is needed to continue support for research and teaching." (1) Furthermore, Sherif Abdelhak, the then-CEO of the Allegheny Health Education and Research Foundation, the then largest health care system in Pennsylvania, proclaimed in Academic Medicine in 1996, "we will need to create new forms of organization that are more flexible, more adaptive, and more agile than ever before." (2) Of course, merger mania, as it was later called, produced financial disasters in some of its applications. Abdelhak's AHERF went bankrupt, and Abdelhak went to jail, convicted of misappropriating charitable funds. (3)
• Physicians as gate-keepers - This fad started in the 1980s, (unfortunately, promoted by John M. Eisenberg, among others, [4]), and lasted through the mid-1990s. For example, in 1992, another New England Journal of Medicine Sounding Board proclaimed, "over90 percent of health maintenance organizations (HMOs} use primary care physicians as gate-keepers. (5) Gate-keeping is all but abandoned now.
• Capitation - Again, from the New England Journal, "those who favor capitation seem to regard it as the sine qua non of effective containment of health care costs.... Meanwhile, health care coverage for more and more Americans is paid for in this way. Between 1987 and 1995, for example, the number of Medicare beneficiaries whose health care was paid by capitation (under so-called risk contracts) almost tripled." (6) Capitation is also now rare.

So just because pay-for-performance is now currently fashionable among health care management types does not mean that will remain so for long, or that it will work very well. Physicians have an ethical responsibility to contribute to this debate, but in a highly skeptical manner, informed by real evidence, and with the goal of improving patient outcomes, while not further fraying our already threadbare capacity to provide accessible, high-quality primary care.
References
1. Rogers MC, SNyderman R, Rogers EL. Cultural and organizational implications of academic managed care networks. N Engl J Med 1994; 331: 1374-1377.
2. Abdelhak SS. How one academic health center is successfully facing the future. Acad Med 1996; 71: 329-336.
3. McKinnon J. Ex-AHERF chief pleads no contest: Abedlhak faces two years in jail. Pittsburgh Post-Gazette, August 30, 2002. P. B-1.
4. Eisenberg JM. The internist as gatekeeper: preparing the general internist for a new role. Ann Intern Med 1985; 102: 537-543.
5. Franks P, Clancy CM, Nutting PA. Gatekeeping revisited - protecting patients from overtreatment. N Engl J Med 1992; 327: 424-429.
6. Berwick DM. Payment by capitation and the quality of care. N Engl J Med 1996; 335: 1227-1231.