Agency News and Notes

AHRQ supports publications on pay for performance

Five articles and three commentaries on the topic of pay for performance are featured in the February 1, 2006 issue of Medical Care Research and Review, which was supported by the Agency for Healthcare Research and Quality. Summaries of the articles are listed below:

Levin-Scherz, J., DeVita, N., and Timbie, J. (2006, February). "Impact of pay-for-performance contracts and network registry on diabetes and asthma HEDIS® measures in an integrated delivery network." Medical Care Research and Review 63, pp. 14S-28S.

This article reviews the experience of a large integrated delivery network that incorporated physician quality metrics into pay-for-performance contracts. The authors present criteria for including measures in pay-for-performance contracts and offer a practical approach to determining withhold return or bonus distribution based on improvement and performance. They demonstrate interventions undertaken to improve performance, including the development of a claims-based registry. Empirical data show that the network performance improved more than the comparable State and national performance during the period of this observational study. The authors conclude that pay-for-performance contracts led to development of medical management programs including a claims-based registry and nonphysician interventions.

Grossbart, S.R. (2006, February). "What's the return? Assessing the effect of 'pay-for-performance' initiatives on the quality of care delivery." Medical Care Research and Review 63, pp. 29S-48S.

This article evaluates the impact of the Centers for Medicare and Medicaid Services' premier pay-for-performance demonstration project on performance improvement in three clinical areas in a multihospital health care system. The study compares a group of hospitals participating in this project against a control group of similar hospitals that did not participate. Although the incentives are extremely small, the findings show that participation in the pay-for-performance initiative had a significant impact on the rate and magnitude of performance improvement. The project led to marked improvement in the quality of clinical process delivery and accelerated the adoption of evidence-based practices.

Nahra, T.A., Reiter, K.L., Hirth, R.A., and others (2006, February). "Cost-effectiveness of hospital pay-for-performance incentives." Medical Care Research and Review 63, pp. 49S-72S.

This article examines the cost-effectiveness of a hospital incentive system for heart-related care, using a principal-agent model, where the insurer is the principal and hospitals are the agents. Four-year incentive system costs for the payer were $22,059,383, composed primarily of payments to the participating hospitals, with approximately 5 percent in administrative costs. Effectiveness is measured in stages, beginning with improvements in the processes of heart care. Care process improvements are converted into quality-adjusted life years (QALYs) gained. An estimated 24,418 patients received improved care, resulting in a range of QALYs from 733 to 1,701, depending on assumptions about clinical effectiveness. Cost per QALY was found to be between $12,967 and $30,081, a level well under consensus measures of the value of a QALY.

Bokhour, B.G., Burgess, J.F., Hook, J.M., and others (2006, February). "Incentive implementation in physician practices: A qualitative study of practice executive perspectives on pay for performance." Medical Care Research and Review 63, pp. 73S-95S.

Using a qualitative interview design, this article examines the role practice executives play in the implementation of pay-for-performance (P4P) programs and how their perspectives and decisions can influence the success of these programs. The authors identified five key findings related to practice executives' views on P4P: quality incentives are better than utilization incentives, quality incentives are bonus rewards, quality incentives are agents for change, providers do not feel they have control over attaining quality targets, and the ways in which quality is measured are problematic. The authors discuss five different ways in which practice executives distribute rewards to physicians. These findings may help payers more effectively design and implement financial rewards for quality.

Beich, J., Scanlon, D.P., Ulbrecht, J., and others. "The role of disease management in pay-for-performance programs for improving the care of chronically ill patients." Medical Care Research and Review 63, pp. 96S-116S.

To date, pay-for-performance programs targeting the care of persons with chronic conditions have primarily been directed at physicians and provide an alternative to health plan-sponsored chronic disease management (DM) programs. Both approaches require similar infrastructure, and each has its own advantages and disadvantages for program implementation. Pay-for-performance programs use incentives based on patient outcomes; however, an alternative system might incorporate measures of structure and process. Using a conceptual framework, the authors explore the variation in 50 diabetes DM programs using data from the 2002 National Business Coalition on Health's eValue8 Request for Information (RFI). The authors raise issues relevant to the assignment of accountability for patient outcomes to either health plans or physicians. They analyze the association between RFI scores measuring structures and processes, and HEDIS diabetes intermediate outcome measures. Finally, the strengths and weaknesses of using the RFI scores as an alternative metric for pay-for-performance programs are discussed.

This issue also features commentaries by a policymaker, a provider, and an employer:

• Glenn Hackbarth, Commentary, Med Care Res Rev 2006 63: 117S-121S.
• Mark R. Chassin, "Does Paying for Performance Improve the Quality of Health Care?" Med Care Res Rev 2006 63: 122S-125S.
• Robert S. Galvin, "Evaluating the Performance of Pay for Performance," Med Care Res Rev 2006 63: 126S-130S.

Articles and commentaries can be downloaded from http://mcr.sagepub.com. Copies of the special supplement (AHRQ Publication No. OM06-0036) are also available from the AHRQ Clearinghouse.

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