Another P4P dud

The Long-Term Effect of Premier Pay for Performance on Patient Outcomes

By Ashish K. Jha, M.D., M.P.H., Karen E. Joynt, M.D., M.P.H., E. John Orav, Ph.D., and Arnold M. Epstein, M.D.
The New England Journal of Medicine, March 28, 2012

Tying financial incentives to performance, often referred to as pay for performance, has gained broad acceptance as an approach to improving the quality of health care. The Centers for Medicare and Medicaid Services (CMS) recently completed a 6-year demonstration of pay for performance for hospitals through the Premier Hospital Quality Incentive Demonstration (HQID), and the Affordable Care Act calls for CMS to expand this program to nearly all U.S. hospitals in 2012. The policy of tying financial incentives to the quality of performance has strong face validity — that is, paying for better care should promote improvements in quality and, ideally, lead to better patient outcomes. Whether pay for performance will lead to better patient outcomes, however, is unclear.

Although there is evidence from the Premier HQID that pay for performance is associated with modest improvements in the processes of care, much less is known about its effect on patient outcomes.

We found little evidence that participation in the Premier HQID program was associated with declines in mortality above and beyond those reported for hospitals that participated in public reporting alone, even when we examined care over a period of 6 years after the program's inception. Furthermore, we found no differences in trends in mortality between conditions for which outcomes were explicitly linked to incentives and conditions for which outcomes were not linked to incentives.

Prior studies of the Premier HQID showed that the early gains in process quality had mostly dissipated after 5 years under the program. Werner et al. found that the modest benefits in adherence to process measures were most perceptible for hospitals that were eligible for larger bonuses, that were well financed, or that operated in less competitive markets. We failed to find that these factors were associated with a significantly greater effect on outcomes.

In summary, we found little evidence that participation in the Premier HQID program led to lower 30-day mortality rates, suggesting that we still have not identified the right mix of incentives and targets to ensure that pay for performance will drive improvements in patient outcomes. Even though Congress has required that the CMS adopt pay for performance for hospitals, expectations with regard to programs modeled after Premier HQID should remain modest.


By Don McCanne, MD

Pay for performance (P4P) is one of the measures in the Affordable Care Act (Sec. 3001) that supposedly is designed to improve quality and reduce costs. The recommendation was based on data such as this Medicare Hospital Quality Incentive Demonstration (HQID) which had shown that providing financial bonuses and penalties improves processes of care. But does it improve outcomes?

This large study of hospital performance had already shown early but non-sustained improvement in processes, but it turns out that paying for this performance did not improve patient outcomes. P4P did not improve 30 day nor 6 year mortality for the conditions studied - three medical conditions (acute myocardial infarction, congestive heart failure, and pneumonia) and two surgical procedures (coronary-artery bypass grafting [CABG] and total knee or total hip replacement). Yet the Affordable Care Act requires that all hospitals participate in the value-based purchasing (VBP) program, which provides financial incentives for both high achievement and improvement in performance - an approach closely modeled after the Medicare HQID.

This "teach to the test" P4P experiment did, in fact, result in rewards and penalties for hospitals based solely on process measures, though having no impact on outcomes. Such programs seem to promote gamesmanship much more than they promote actual improvements in quality - appealing to hospitals that were "eligible for larger bonuses, that were well financed, or that operated in less competitive markets." It is yet another example of the multitude of unproven or minimally effective quality and cost measures in the Affordable Care Act.

The tragedy is that Congress and the President rejected the proven model of reform that would have achieved these goals - a single payer national health program. One benefit of the Supreme Court hearings this week is that there has been a resounding response that single payer is the answer. If only we could convert that perception into action. If only...