Pay for Quality?

January 1, 2005

Will pay for performance ever be real?

In September 2001, Physicians Practice ran an article proclaiming that "quality of care ... is emerging as the basis of physician incentive plans across the country."

Well, it's three years later and it hasn't happened yet, but the concept of reimbursing for good care instead of just more care is back in the spotlight.

Our cover story features a practice that is paid more for quality (really) and is embraced by payers for its data. The Leapfrog Group's rise to influence, The Institute of Medicine's attack on healthcare quality in the U.S., the launch of the innovative "The Business Case for Quality" Web site (www.uft-a.com) -- these forces and a general increased sensitivity to "safety" on our shores has pushed "pay for performance" back into popular parlance.

I've always been skeptical of this idea, for a number of reasons:

Payers can't be trusted with defining what good quality is -- and thus what they will pay more for. And, apart from a few well-recognized examples, many physicians can't even agree among themselves about what constitutes good medicine.

The data stinks. We all know physicians simply don't or can't bill for everything they do, so how is any payer looking at claims data going to have any idea of what is really happening in a given practice? Claims data and clinical performance data are not the same thing. And no physician wants to do more paperwork to track their performance just to prove to some payer that she is, in fact, a good physician.

Why would a payer ever do this? While in my less cynical moments I see that managed-care companies want to treat patients well, they do ultimately answer to shareholders each quarter. An investment in, say, smoking cessation programs that will pay off in fewer lung cancers 20 years from now doesn't make sense for publicly held companies with quarterly financial goals to reach. As usual in healthcare, the incentives are all screwed up.

Yeah, right. The system is a mess. I'll believe it when I see it.

But lately I find myself less able to muster my usual cynicism. I'm excited at the prospect of physicians, instead of payers, driving the quality process, and I'm starting to think it's possible.

I am still doubtful that measuring and even improving performance will mean overnight changes to how healthcare is reimbursed in this country. Healthcare is just a darn big boat to steer and there are many long-encrusted barnacles -- vested interests -- that keep the thing from veering at all.

But, just a boost in physician empowerment is worth shooting for.

Most of my newfound optimism comes from the increasing acceptance of EMRs. At its best, clinical software can help a practice more easily track performance on its own so data doesn't rely on claims submission. Like the practice featured on our cover, physicians can take data to payers -- or large employers -- and insist on better rates. They define the measurements for themselves, gather the data, and negotiate the rewards.

While they are measuring themselves, physicians can measure the performance of the payers. How are they doing with their appeals process, their denial rates, and their allowables relative to industry benchmarks? New software makes this a relatively easy analysis.
Software also makes it easier to ensure compliance with evidence-based protocols to begin with. A simple electronic reminder makes good medicine so much easier in the mile-a-minute chaos of most offices. If a patient is mostly concerned about some other matter and your nurse is banging on the door, and the phone lines are down, it's all too easy to overlook the fact that your patient is past-due for some sort of routine check-up or new prescription.

I think it's worth tracking your compliance to clinical guidelines for your patients' sake, of course, but also because it means efficiencies and cost savings. The same orders to the nurse each time, fewer runs to the hospital when a patient with an unmanaged chronic disease gets suddenly seriously ill, fewer misunderstood directions, fewer phone calls from worried patients who realize some issue wasn't covered in their last visit.

Insurers may be slow-comers in the "pay for performance" concept. But it's becoming clear that better performance pays for itself.

Pamela Moore is senior editor, Physicians Practice. She can be reached at pmoore@physicianspractice.com.

This article originally appeared in the January 2005 issue of Physicians Practice.