Pay for Performance: An Overview of 10 Performance Domains

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October 17th, 2012
Categories: Healthcare Reform

Paying Money for PerformanceInitiated by both commercial and public payers, pay for performance (P4P) programs have become widespread in the healthcare system.  The Affordable Care Act also includes an array of P4P initiatives and pilot programs that aim to improve healthcare delivery, quality and efficiency by directly linking financial incentives to clearly defined performance measures.  P4P offers an alternative to the dominant fee-for-service system (FFS) that encourages a higher volume of healthcare services without regard to the effect on quality or cost.

Some P4P programs have more of a broad focus and cover several domains of performance, while others may address single goal or performance benchmark.  Payers may also implement programs in stages, starting with a single goal and gradually building on its structure by incorporating additional performance measures. There are numerous variables to consider when choosing performance domains, indicators of performance and provider incentives. These variables may include the importance of individual domains, the overall goals of the program, the availability of meaningful measures, the potential for clinical improvement, existing problem areas, cost and availability of data.

Below, we highlight 10 key Pay for Performance domains that are the focus of P4P initiatives in the US healthcare system.

  1. Clinical Outcomes

    Being that the main goal of healthcare is to maintain or improve patient health, clinical outcomes are often a desired performance domain. Clinical outcome measures include mortality, morbidity, functional ability, quality of life, and avoidance of intensifying chronic conditions.  Outcomes can be influenced by numerous factors, some of which may be outside of physician control, like patient adherence to recommended care.

  2. Patient Safety

    This domain includes incentives for reducing preventable health problems that develop during a surgery or hospital stay. This may include various infections, pressure ulcers, blood incompatibility and air embolism. In reality, this domain is usually part of a “no-pay-for-no-performance” type of program.

  3. Access and Availability of Care

    Measuring access to care can be particularly important in settings, such as capitated payment systems, that have incentives to withhold services. Using the health plan as a unit for measuring access is likely, since it controls benefit design and the provider network.

  4. Patient Experience/Satisfaction

    Patient satisfaction surveys are used to provide information relating to provider organization/physician performance from the point of view of the patients.  Typical points that can be rated are level of communication; amount of difficulty in getting referrals, tests, or care; whether patients receive needed care; how quickly care is delivered; the level of a physician’s customer service; and the method providers submit and process claims.  The number of existing patients who have changed doctors or new patients who have selected doctors can also provide insight into patient satisfaction.

  5. Cost Efficiency and Cost of Care

    Cost Efficiency is the cost of providing a certain level of quality care or achieving a particular health outcome. A cost efficiency measure may be the cost of producing additional quality of adjusted life years.  Cost of Care is the cost of producing a health service. Some examples of cost of care measures are the number of hospital days per patient, and cost per episode of care.  Because cost of care measures are easier to quantify than cost efficiencies, they tend to be more frequently reported than cost efficiencies.

  6. Cost Effectiveness

    Cost Effectiveness is the relative cost of alternate methods of care that produce desired outcomes.  P4Ps may reward physicians who order fewer tests that are deemed medically unnecessary by clinical practice guidelines.

  7. Adherence to Evidence-Based Medical Practice

    Adhering to evidenced-based standards of care may enhance physicians’ quality and efficiency.  P4P may reward physicians for following evidence-based standards of care in patient treatment (e.g., following an evidence-based decision algorithm when deciding to order advanced imaging tests for abdominal pain).

  8. Administrative Compliance and Efficiency

    Administrative compliance and efficiencies are related to aspects of care outside of clinical performance that are important to payers.  Payers may provide rewards for electronic submission of claims, timeliness of submission and low coding error rates.

  9. Adoption of Information Technology

    Most, if not all payers view adoption of information technology (IT) as critical to improving care coordination, quality and efficiency.  Payers may choose to reward organizations and physicians for use of EMR systems, electronic prescriptions or other health IT systems.

  10. Participation and Reporting of Performance Goals

    Participation in attending quality improvement initiatives, developing quality improvement action plans and comprehensive reporting of performance goals is vital to pay for performance programs.  For P4P to be fair and effective, provider organizations and physicians must report on their performance goals frequently and accurately. “Pay for reporting” is the first step toward improving the data to which payers can apply incentives.


One Comment

  • Good, concise article. But remember that the federal Civil Monetary Penalties law can easily be implicated if P4P programs reward providers for reducing units of service, even services not medically necessary. Although rewarding increased prescribing of generic drugs over branded pharmaceuticals may be acceptable, rewarding providers for fewer tests or MRIs, for example, could be unlawful in certain circumstances. Compentent legal counsel should be consulted.
    [This post is not intended, nor should it be construed, as legal advice or a solicitation of potential clients.]