What Can P4P Do For You?

January 4, 2010

Pay-for-performance programs, or P4P as they are more commonly known, are designed to improve the quality, effectiveness, and safety of patient care.

Pay-for-performance programs, or P4P as they are more commonly known, are designed to improve the quality, effectiveness, and safety of patient care. These programs are patient-centered and link evidence-based performance measures to financial incentives. Medicare, Medicaid, and commercial insurance plans all offer P4P programs, but there is wide variation and some programs are restricted in certain states and regions of the country.

Today more than half of all managed care companies in the U.S. include P4P options in their provider contracts. Although Medicare spearheaded the P4P movement, the largest P4P programs (by dollars paid and patient volume) are those sponsored by commercial health plans. National plans such as UnitedHealthcare, Aetna, Cigna, and Humana are all offering P4P programs in one part of the country or another.

Physician performance is scored based on certain measures that evaluate health outcomes in patients assigned to practices for care of specific diseases. Payers use a number of methods to financially reward physicians for meeting performance targets, including bonuses and additional payments. However, the most common models are “fee differentials,” which involve paying a percentage above the standard payment - such as an additional 2 percent above total annual revenue - and/or bonuses paid quarterly or annually.

Some plans offer “shared savings” models, whereby savings gained through quality improvement efforts are shared between the plan and the physicians. Some plans offer a flat rate per patient: For example, participation in the Bridges to Excellence coalition can result in up to $50 for preventive measures, $80 for diabetes management, or $160 for cardiac care, for each participating patient per year.

So what’s in it for you? Ultimately, it comes down to getting paid well for the good work that you do. If you are achieving better outcomes than other physicians in a payer’s network, you should be recognized for those outcomes. But while that sounds attractive, it may not be as easy as simply signing up for a P4P program with your local health plan.

Because P4P programs focus on a range of performance measures, you will need a way to capture your data and measure your own compliance. The areas most frequently measured include management of diabetes, heart disease, asthma and respiratory diseases, immunizations, and preventive screenings such as routine mammography and cancer screening.

Some payers require you to send the data to them directly; others track claims data to measure your performance. While clinical measures continue to be the primary focus for these programs, payers also include a measurement for efficiency, which usually corresponds to the use of formularies and the rate of generic drug prescriptions.

In order to verify your score, track your own progress, and submit your data, use of comprehensive practice-management systems (including electronic health records and electronic prescription programs) is almost mandatory. In fact, use of such technology is rewarded in roughly 42 percent of such programs. If you don’t have an EHR, you can still participate. However, it will require additional effort to track information properly in a paper-based environment and that can be costly.

The bottom line? When evaluating whether or not to participate in a P4P program, first figure out how much it will cost you to do so. If the cost is higher than the potential gain, you cannot reap the benefit of these programs.

Susanne Madden is founder and CEO of The Verden Group, a consulting firm that helps physicians handle the complexity and volume of change in managed care today. She writes and speaks frequently on all aspects of managed care. She can be reached at madden@theverdengroup.com or by visiting www.theverdengroup.com.