Pay for performance systems can improve patient safety by linking providers' compensation to measures of work quality or process goals. , 75 percent of all U.S. companies connected at least part of an employee's pay to measures of performance, and in healthcare, over 100 private and federal pilot programs were underway. Methods of healthcare payment current at that time may actually have rewarded less-safe care, since some insurance companies will not pay for new practices to reduce errors, while physicians and hospitals can bill for additional services that are needed when patients are injured by mistakes. However, early studies showed little gain in quality for the money spent, as well as evidence suggesting unintended consequences, like the avoidance of high-risk patients, when payment was linked to outcome improvements. The 2006 Institute of Medicine report
Preventing Medication Errors recommended "incentives...so that profitability of hospitals, clinics, pharmacies, insurance companies, and manufacturers (are) aligned with patient safety goals...(to) strengthen the business case for quality and safety." Canada, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States.
United Kingdom In the United Kingdom, the
National Health Service (NHS) began an ambitious pay-for-performance initiative in 2004, known as the Quality and Outcomes Framework (QOF). A component of this program, known as
exception reporting, allows physicians to use criteria to exclude individual patients from the quality calculations that determine physician reimbursement. There was initial concern that exception reporting would allow inappropriate exclusion of patients in whom targets were missed ("gaming"). However, a 2008 study has shown little evidence of widespread gaming.
United States In the United States,
Medicare has various pay-for-performance ("P4P") initiatives in offices, clinics, and hospitals, seeking to improve quality and avoid unnecessary healthcare costs. The
Centers for Medicare and Medicaid Services (CMS) has several demonstration projects underway offering compensation for improvements: • Payments for
better care coordination between home, hospital, and offices for patients with chronic illnesses. In April 2005, CMS launched its first value-based purchasing pilot or "demonstration" project- the three-year Medicare Physician Group Practice (PGP) Demonstration. The project involves ten large, multi-specialty physician practices caring for more than 200,000 Medicare fee-for-service beneficiaries. Participating practices will phase in quality standards for preventive care and the management of common chronic illnesses such as diabetes. Practices meeting these standards will be eligible for rewards from savings due to resulting improvements in patient management. The
First Evaluation Report to Congress in 2006 showed that the model rewarded high quality, efficient provision of health care, but the lack of up-front payment for the investment in new systems of case management "have made for an uncertain future with respect for any payments under the demonstration." • A set of 10
hospital quality measures which, if reported to CMS, will increase the payments that hospitals receive for each discharge. By the third year of the demonstration, those hospitals that do not meet a threshold on quality will be subject to reductions in payment. Preliminary data from the second year of the study indicates that pay for performance was associated with a roughly 2.5% to 4.0% improvement in compliance with quality measures, compared with the control hospitals. Dr. Arnold Epstein of the Harvard School of Public Health commented in an accompanying editorial that pay-for-performance "is fundamentally a social experiment likely to have only modest incremental value." Unintended consequences of some publicly reported hospital quality measures have adversely affected patient care. The requirement to give the first antibiotic dose in the emergency department within 4 hours, if the patient has pneumonia, has caused an increase in pneumonia misdiagnosis. •
Rewards to physicians for improving health outcomes by the use of
health information technology in the care of chronically ill Medicare patients. •
Disincentives: The Tax Relief & Health Care Act of 2006 required the
HHS Inspector General to study ways that Medicare payments to hospitals could be recouped for "never events", as defined by the
National Quality Forum, including hospital infections. In August 2007, CMS announced that it will stop payments to hospitals for several negative consequences of care that result in injury, illness or death. This rule, effective October 2008, would reduce hospital payments for eight serious types of preventable incidents: objects left in a patient during surgery, blood
transfusion reaction,
air embolism, falls,
mediastinitis,
urinary tract infections from
catheters,
pressure ulcer, and
sepsis from catheters. Reporting of "never events" and creation of performance benchmarks for hospitals are also mandated. Other private health payers are considering similar actions; in 2005, HealthPartners, a Minnesota health insurer, chose not to cover 27 types of "never events". The
Leapfrog Group has announced that they will work with hospitals, health plans, and consumer groups to advocate reducing payment for "never events", and will recognize hospitals that agree to certain steps when a serious avoidable adverse event occurs in the facility, including notifying the patient and
patient safety organizations, and waiving costs. Physician groups involved in the management of complications, such as the Infectious Diseases Society of America, have voiced objections to these proposals, observing that "some patients develop infections despite the application of all evidence-based practices known to avoid infection", and that a punitive response may discourage further study and slow the dramatic improvements that have already been made.
Complex illness Pay-for-performance programs often target patients with serious and complex illnesses; such patients commonly interact with multiple healthcare providers and facilities. However, pilot programs now underway focus on simple indicators such as improvement in lab values or use of emergency services, avoiding areas of complexity such as multiple complications or several treating specialists. A 2007 study analyzing Medicare beneficiaries' healthcare visits showed that a median of two primary care physicians and five specialists provide care for a single patient. The authors doubt that pay-for-performance systems can accurately attribute responsibility for the outcome of care for such patients. The American College of Physicians Ethics has stated concerns about using a limited set of clinical practice parameters to assess quality, "especially if payment for good performance is grafted onto the current payment system, which does not reward robust comprehensive care...The elderly patient with multiple chronic conditions is especially vulnerable to this unwanted effect of powerful incentives." Present pay-for-performance systems measure good performance based on specified clinical measurements, such as
glycohemoglobin for diabetic patients. Healthcare providers who are monitored by such limited criteria have a powerful incentive to
deselect (dismiss or refuse to accept) patients whose outcome measures fall below the quality standard and therefore worsen the provider's assessment. ==Public reporting==