P4P should incite the policy community

Pay for performance: a dangerous health policy fad that won’t die

By Kip Sullivan and Stephen Soumerai
STAT, January 30, 2018

Pay for performance, the catchall term for policies that purport to pay doctors and hospitals based on quality and cost measures, has been taking a bashing.

Last November, University of Pittsburgh and Harvard researchers published a major study in Annals of Internal Medicine showing that a Medicare pay-for-performance program did not improve quality or reduce cost and, to make matters worse, it actually penalized doctors for caring for the poorest and sickest patients because their “quality scores” suffered. In December, Ankur Gupta and colleagues reported that a Medicare program that rewards and punishes hospitals based on arbitrary limits on the number of hospital admissions of heart failure patients may have increased death rates. On New Year’s Day, the New York Times reported that penalties for “inappropriate care” concocted by Veterans Affairs induced an Oregon hospital to deny acute medical care to its sickest patients, including an 81-year-old “malnourished and dehydrated” vet with skin ulcers and broken ribs.

And just three weeks ago, the Medicare Payment Advisory Commission recommended that Congress repeal a Medicare pay-for-performance program, imposed by Congress in 2015, because the program is costly and ineffective.

This bad news comes on top of a decade of less-publicized research indicting policies intended to reward and penalize doctors based on measures — most of them inaccurate — of their cost and quality. That research demonstrates that penalties against doctors:

  • Do not improve the health of patients
  • Harm sicker and poorer patients
  • Encourage doctors and hospitals to avoid or “fire” sicker patients who drag down quality scores due to factors outside physicians’ control
  • Cause some doctors to stop using lifesaving treatments if they don’t result in bonuses
  • Create interruptions in needed medical care
  • Reduce job satisfaction and undermine altruism and professionalism among doctors
  • Cause doctors to game quality measures. For example, a Medicare program that punished hospitals for hospital-acquired infections actually induced some hospitals to characterize infections acquired after admission as “present upon admission” or to simply not report the infection rather than reduce actual infection rates.

Subjecting doctors and hospitals to carrots and sticks hasn’t worked for several reasons. The most fundamental one: Clinician skill is not the only factor that determines the quality of care. Consider one widely used performance measure: the percent of patients diagnosed with high blood pressure whose blood pressure is brought under control. Doctors who treat older, sicker, and poorer patients with high blood pressure will inevitably score worse on this so-called quality measure than doctors who treat healthier and higher-income patients.

This divergence between actual and measured skill will happen — regardless of economic incentives — because of factors outside physicians’ control. These include patients’ health, genes, income, ability and willingness to exercise, access to health insurance, and stressors at home and work. In other words, this “performance” measure is not a measure of quality but a mishmash of many factors, only one of which might be physician skill.

The use of such crude performance measures creates several destructive side effects, most notably harm to patients. This harm is inflicted in two ways. First, doctors who treat a disproportionate share of sicker and poorer patients are the most likely to be hit with penalties and therefore end up with reduced resources with which to treat their patients. Second, the certainty that sicker and poorer patients drag down doctors’ scores causes some doctors to avoid treating these patients, causing serious preventable illness and additional medical costs.

Performance-based pay may improve the sales of products like dishwashers and computer products. But it is irrelevant to the complexities and professionalism of good doctoring and other human services like education. The research on pay for performance in health care is now conclusive: It’s time to terminate these harmful bonus-and-penalty schemes.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Policy Advisory Committee and the legislative strategy committee of the Minnesota Chapter of Physicians for a National Health Program. Stephen Soumerai, Sc.D., is professor of population medicine and founding and former director of the Division of Health Policy and Insurance Research at Harvard Medical School, where he teaches research methods.


Performance-based financing in low-income and middle-income countries: isn’t it time for a rethink?

By Elisabeth Paul, Valéry Ridde, et al
BMJ Global Health, January 13, 2018


This paper questions the view that performance-based financing (PBF) in the health sector is an effective, efficient and equitable approach to improving the performance of health systems in low-income and middle-income countries (LMICs). PBF was conceived as an open approach adapted to specific country needs, having the potential to foster system-wide reforms. However, as with many strategies and tools, there is a gap between what was planned and what is actually implemented. This paper argues that PBF as it is currently implemented in many contexts does not satisfy the promises. First, since the start of PBF implementation in LMICs, concerns have been raised on the basis of empirical evidence from different settings and disciplines that indicated the risks, cost and perverse effects. However, PBF implementation was rushed despite insufficient evidence of its effectiveness. Second, there is a lack of domestic ownership of PBF. Considering the amounts of time and money it now absorbs, and the lack of evidence of effectiveness and efficiency, PBF can be characterised as a donor fad. Third, by presenting itself as a comprehensive approach that makes it possible to address all aspects of the health system in any context, PBF monopolises attention and focuses policy dialogue on the short-term results of PBF programmes while diverting attention and resources from broader processes of change and necessary reforms. Too little care is given to system-wide and long-term effects, so that PBF can actually damage health services and systems.



By Don McCanne, M.D.

We are living through the generation of health policy research. By applying health policy science we should be able to improve the quality of health care while controlling costs. But what we are seeing instead is the widespread implementation of schemes without adequate evidence of their effectiveness. P4P - pay for performance - is one such scheme.

We now have overwhelming evidence that P4P does not work as intended. It does not improve performance, supposedly by giving rewards for (largely flawed) measures of performance, but, in fact, it can create perverse incentives that impair outcomes, as Kip Sullivan and Stephen Soumerai explain.

Furthermore, Elisabeth Paul, Valéry Ridde and their colleagues show us that the widespread acceptance and implementation of this concept throughout the world "can actually damage health services and systems."

Right now we are swamped with policy concepts that are being adopted on a wholesale basis without adequate evidence of either effectiveness or safety - an approach that is antithetical to the health sciences. Just a couple of examples of these schemes include ACOs, MIPS, APMs, and now VVP (to be covered soon in another Quote of the Day).

How have we been doing with this applied health policy that lacks scientific support? Costs continue to be outrageous while we have compromised access through the financial barriers of underinsurance; we have reduced choice through limited provider networks, and we have left tens of millions uninsured.

In sharp contrast are the proven policies inherent in a well designed single payer system. Our immediate attention should be redirected to enacting and implementing those policies instead. Once we have an efficient financing infrastructure in place we will have a much better foundation on which to use the tools of health policy science to improve efficiency and outcomes.

Instead of wasting our time with a parked cart on a fallow field, we should be nurturing the horse and sowing the field. In health policy, P4P and the other schemes have shown us that we are wasting our time with a horseless cart. Our pathetic results should be no surprise.

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