The terms value-based purchasing and healthcare pay for performance are medical terms used in the healthcare system to reward doctors, nurses, and other healthcare providers for their valuable services instead of the total number of services they provided in the given time. When healthcare providers are paid through rewards rather than their claimed reimbursements, these models are called alternative payment models (APMs).
The healthcare providers’ services are rewarded based on the efficiency they show to improve patients’ experience, and satisfaction, and provide quality service at a low cost and significant per-capita spending. These programs have become common in the healthcare systems, both for private and public insurers. However, pay-for-performance healthcare programs are mostly run by individual insurers who collide with multiple stakeholders.
On the other hand, with constant appreciating public statements and witnessing the demonstration of valuable projects, the Centers for Medicare and Medicaid Services has shown positive intentions to adapt pay-for-performance programs for nurses, hospitals, physicians, and associated institutions of healthcare providers.
Healthcare Pay for Performance reimbursement context
Payment systems like healthcare pay for performance are inclusive efforts in order to introduce a range of other incentives to the healthcare payment systems but they are already incentive generators themselves. In most parts of the United States, physicians are more paid against fee-for-service, which increases the number of services provided where the value is being compromised while encouraging the volume of services.
In particular, in a fee-for-service system, some procedures are highly paid compared to others. Similarly, the payment systems provide the choice of procedure to take on for the physicians (especially in the therapeutic practice) which promotes procedure-based treatments.
When physicians work under a salary-capital arrangement, fee-for-service arrangements are not tied to their current salary arrangement, hence there are no financial incentives for provided services. The difference in payment structures has levied concerns about the shortage of workforce supply for services.
No matter what payment setting is introduced to a public or private financial institution, it is a fact that pay for performance has significantly altered and incentivized financial incentives over salary capita and influenced providers. This is why the existing incentives must be evaluated and reinforced to improve the physician workforce count in usual payment systems.
How healthcare pay for performance payment systems is a good initiative?
Some of the institutions think that the pay for performance payment system halts professionalism as it pays twice to a physician for the same service. However, it will be more appropriate to evaluate between the current systems either capitation or fee-for-service.
Pay for performance won’t take a payment system or capitation in place in any case, but it will enable insurance payers to consider quality indicators along with the service volume or the covered entities under capitation. Apparently, pay for performance payment system compels the payers to review existing distortionary incentives of the claim reimbursement system and bring effective amendments to the mechanism.
This can be done for instance, by rewarding connected activities such as managing ill patients and screening that always have been under-reimbursed as the technical services provided. Rewarding such healthcare activities important to manage the population’s health technically will encourage physicians to realign their priorities to maximize prevention and of course, provide quality service.
Is pay for performance relay work?
Healthcare pay for performance studies showing that it is an effective payment system are not much publicized and there are a handful of studies for the system in healthcare literature. In these studies, many of them show null findings, and 2 of them show moderate improvement in controlled environments where the improvement is measured under an evidence-based measure of quality in the pay for performance system. In addition, the current generation evaluation of pay for performance was published with mixed thoughts.
It is, however, quite considerable to conclude now that pay for performance impacts positively on healthcare provision and quality of service. For wide adoption of pay for the performance payment system, payors still need to learn about the impact and effectiveness.
The unintended consequence of pay for performance
The mechanism or pay for performance challenges payors to adapt to the system is just not limited to healthcare professionals enticed by being paid for the services while delivering quality services. Some possible consequences are also there that payors are considering with respect to adapting this payment mechanism.
There are two most important challenges in view of patient care using pay-for-performance structures;
- Dealing patients putting efforts and time into a particular patient that may neglect other populations to maximize incentives
- Making sure that tests and treatments do not result in worse care and providing extra services to be paid multiple times.
Payers and physicians who object on pay for performance parameters argue that the quality does matter but the service should be based on the severity and possible illness of a patient. It is common in healthcare measures that patients who are less ill bring the low score to the table no matter how hard a physician work to serve them with quality care.
Hence, the consequences of adapting pay for the performance system challenge payors the risk adjustments and different approaches that may decrease or increase physicians’ incentives.
On the flip side even if a physician is performing well in all areas of his practice, rewarding some treatments and procedures and segregating activities that are not rewarding will surely make them feel discouraged. Some or many of them would be important for a patient and their health but eventually are difficult to measure. Learning to grade this response with respect to the service and performance is referred to as ‘teaching to the test. In addition to learning and teaching, some critics concern that in the race of scoring high and paying well, the essential dimensions of health schooling education and experiences are faded.
At the same time, when the mechanisms like pay for performance programs focus on the necessity of scoring, the healthcare areas where the consensus establishes the need for high-quality care, the aspects of care suffer.
In a broader pane, payors can constitute wider measures, which include individual care process provided and patient’s experience towards the service. The least that payors can do is consider interrelationships and tradeoffs among targeted and nontargeted areas of pay for performance systems.
Healthcare pay for performance is assumed to be the outcome of unavoidable modification in the quality measurements and reporting. Currently, there is sufficient data and studies are present to convince the decision-making entities like Congress and purchasers of healthcare insurance to accept the problems in the current healthcare payment system. With this data, it can be hard to limit the reforms with the urge to make alterations to the imperfect financial system.
Effectively usage of pay for performance payment systems in the healthcare industry will eliminate some of the common distortions created by the current payment system and help progress crucial aspects of the population’s health.
However, if pay for performance is taken into account, it will require effective and careful design to safeguard unintentional outcomes associated with the expected challenge. Plus, it would also need to make sure that these positive changes would not be at a higher healthcare cost.