ay for performance (P4P) programs propose to link payment rates to evidence of achievement of specific quality care indicators. This initiative grew out of the 1999 Institute of Medicine (IOM) report To Err Is Human and the resultant paradigms of care improvement embraced by the Leapfrog Group, the Institute for Healthcare Improvement (IHI) and others. Advocates for P4P believe that it will improve quality of care.¹ Furthermore, this strategy is seen as a means of saving money as it rewards efficiency and substitutes payment for quality in place of payment linked solely to volume of services provided.² This type of program has been extant in some private payer arrangements, and primary care has now seen the initiation of these policies by federal and state payers as well. The Integrated Healthcare Association (IHA) began its P4P program in 2001.³ Other payers have begun “pay for participation” programs in which practitioners and facilities can receive payment by simply sharing outcome data rather than by hitting a particular quality “mark.”⁴ This has culminated with Medicare’s Physician Quality Reporting Initiative (PQRI), which began on July 1, 2007.

The incentives that have been discussed usually range from 1 percent to 5 percent of a physician’s total revenue.⁵ Providing more money has increased quality in specific markets, but pay for performance is very early in its evaluation.⁶ One of the lessons learned at IHA is that larger amounts of payment will induce more rapid and widespread compliance with the program objectives. As a result, it has instituted an increase in its bonus program that will reach as high as 10 percent by the end of the decade, up from an initial 1.5 percent. Some postulate that incentives as high as 20 percent will be necessary to effect quality improvement. It must be remembered that these are “holdbacks” and that the rewards of these programs will be extracted from the payments of those who do not meet P4P targets or have none.⁷ In the case of PQRI, Medicare offers physicians a bonus payment of up to 1.5 percent of their 2007 charges (subject to a cap) for reporting on a designated set of 74 quality measures.⁸

Specialty societies have been invited to provide recommendations for appropriate measures of quality to be used in the production of P4P programs by the Centers for Medicare & Medicaid Services (CMS). Coordinated through the American Medical Association (AMA) Physician Consortium for Performance Improvement (PCPI), AMA has invested more than $5 million in development of 140 measures,⁹ the first half of which became part of Medicare’s 2007 PQRI system on July 1, 2007.¹⁰ Medicare is required by law to have measures adopted or endorsed by a consensus organization such as the AQA Alliance (formally the Ambulatory Care Quality Alliance) or the National Quality Forum. This has slowed the approval process.

Measures for P4P can be outcome — assess the quality of care to the extent that health care services influence the likelihood of the desired outcome; process — assess adherence to recommendations for clinical practice based upon evidence or consensus; or structural — describe the capability of the professional rather than care provided or results achieved (e.g., a nurse/patient ratio is a structural measure).¹¹ The types of measures advocated for use in P4P programs should generally meet the following 10 criteria:¹²

• High volume: the diagnoses involved must be relatively common.

• Gravity: the conditions that are to be affected must be significant.

• Empirical evidence: process and structural measures may rest upon empirical evidence, but outcome measures require the more rigorous test of randomized, controlled trials in the peer-reviewed literature.

• Gap: there must be evidence that a significant difference exists between the current practice and the best practice.

• Probability: there must be likelihood that the intervention being promulgated will improve the outcomes as desired.

• Reliability: the measure (or “metric”) is consistent when measured by various observers, at various points in time, and in various settings.

• Validity: the metric is proven to actually measure its intended endpoint, and it is clearly defined so as not to be left open to interpretation by various stakeholders.

• Feasibility: there must be a way to efficiently obtain the measurement.

• Acceptance/approval: the metric should have been identified by such quality measurement organizations as the National Quality Forum, the AMA PCPI, the National Committee on Quality Assurance or by CMS itself.

• Applicability in several settings: there must be utility of the metric in many practice settings, ideally ranging from the single-practitioner office to major medical centers.

The ASA Administrative Council, directors and members of the committees on Performance and Outcomes Measurement, Economics, Critical Care Medicine, Pain Medicine, and Ambulatory Surgical Care have all been active in the process of evaluating quality measurements to meet the above criteria. This will be an area of dynamic activity for some time to come and will continue to deserve this high level of ASA organizational attention. Members are encouraged to report any activity in this regard among private payers to the chairs of these committees or to ASA Vice-President for Professional Affairs Robert E. Johnstone, M.D.

References:
1. Epstein AM, Lee TH, Hamel MB. Paying physicians for high-quality care. N Engl J Med. 2004; 350:406-410.
2. Hackbarth GM. Medicare payment to physicians. Statement before the Subcommittee on Health, Comm on Energy and Commerce, U.S. House of Representatives; November 17, 2005. www.MedPAC.gov/search/searchframes.cfm.
3. Integrated Healthcare Association. www.iha.org.
4. Birkmeyer NJO, Birkmeyer JD. Strategies for improving surgical quality — should payers reward excellence or effort? N Engl J Med. 2006; 354:864-870.
5. Strunk B, Hurley R. Paying for quality: Health plans try carrots instead of sticks. HSC Brief No. 82, May 2004. Via PubMed: PMID: 15151134.
6. Grabowski DC, Angelelli JL. The relationship of Medicaid payment rates, bed constraint policies, and risk-adjusted pressure ulcers. Health Serv Res. 2004; 39:793-812.
7. Milgate K, Cheng SB. Pay-for-performance: The MedPAC perspective. Health Aff. 2006; 25:413-419.
8. Centers for Medicare and Medicaid Services, MLN Matters Number MM5558, March 9, 2007. www.cms.hhs.gov/MLNMattersArticles/downloads/MM5558.pdf. Accessed on July 28, 2007.
9. www.asa-assn.org/ama/pub/category/2946.html.
10. Centers for Medicare and Medicaid Services, Coding for Quality: A Handbook for PQRI Participation June 18, 2007. www.cms.hhs.gov/PQRI/Downloads/PQRI_Coding_for_Quality_Handbook.pdf. Accessed on July 8, 2007.
11. Stead SW, Pay for Performance: How Anesthesiology Can Participate, 2006 Practice Management Meeting, February 2006.
12. Bierstein K. Pay for Performance in Ambulatory Anesthesia. SAMBA Annual Meeting May 2006.

Douglas G. Merrill, M.D., is Medical Director, Ambulatory Surgery, and Professor, Anesthesia, Carver College of Medicine, University of Iowa, Iowa City, Iowa.

Steven L. Sween, M.D., is Chair, Department of Anesthesia, Saint Joseph’s Hospital of Atlanta, Atlanta, Georgia.

Stanley W. Stead, M.D., M.B.A., is CEO, Stead Health Group, Inc., and Clinical Professor of Anesthesia and Pain Management, University of California-Davis, Encino, California.