Pay for performance: the best worst choice

A new concept in healthcare reimbursement that links payment and adherence to safety and quality standards Pay for performance (“P4P”) is the latest catch phrase to cross over from the world of commerce to the work of clinicians. The basic concept is simple: rather than paying for care by the piecework method (fee for service) or using administered price arrangements (for example, daily rates, fee schedules and capitation), reimbursement should be linked at least in part to adherence to safety and quality measures. According to the American Academy of Family Physicians, typical measures center on utilization and cost management (for example, average number of emergency department visits per patient per year); clinical quality/effectiveness (for example, the percentage of patients with asthma on controller medications); patient satisfaction (for example, the percentage of patients who would recommend the physician to a family member or friend); administrative (for example, the practice’s level of information technology); and patient safety (for example, the percentage of patients questioned about allergic drug reactions).1 P4P programs offered by health maintenance organizations (HMOs) in the US already affect more than 30 million people (or nearly a third of all HMO members), according to one survey. Physician practices participating in these programs find that 1–40% of their annual income is involved in a P4P bonus or withhold, with an average of 10%. More to the point, the percentage of state governments, employer coalitions, and health plans sponsoring these programs was projected to increase from 40% in 2003 to about 80% by 2006. …