Center for Studying Health System Change

Slow Start for Physician Pay for Performance (P4P) in Many Communities

Physician Response to P4P Ranges from Support to Resistance

News Release
Dec. 14, 2005

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—Despite the national buzz about the potential of offering financial rewards to physicians to improve patient care, pay-for-performance (P4P) initiatives are still on the drawing board in many local communities, according to a study released today by the Center for Studying Health System Change (HSC).

"While there’s been plenty of buzz about pay for performance as a way to improve health care quality, the reality is that these initiatives are off to a slow start in many communities," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

Noting that Congress is considering physician pay-for-performance initiatives in Medicare, Ginsburg added, "There isn’t yet a lot of private-sector experience for Medicare to build on, but if Medicare does move forward with broad pay-for-performance requirements, it could serve as a powerful catalyst to jumpstart P4P activities."

The study’s findings are detailed in a new HSC Issue Brief—Can Money Buy Quality? Physician Response to Pay for Performance—available online here. The study is based on HSC’s 2005 site visits to 12 nationally representative communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

Of the 12 communities tracked by HSC for the last 10 years, only two—Orange County and Boston—have significant physician pay-for-performance programs. In the other communities, where almost no physicians have received quality-related payments to date, physician attitudes about P4P range from skeptical to hostile, the study found.

"Orange County and Boston are out front in part because physicians in both communities are organized in large medical groups, health systems or independent practice associations that have the resources to manage care systematically and track physician performance," said HSC Senior Consulting Researcher Thomas Bodenheimer, M.D., of the University of California, San Francisco, and coauthor of the study with HSC Health Research Analyst Jessica H. May; HSC Senior Consulting Researcher Robert Berenson, M.D., of The Urban Institute; and HSC Consulting Research Assistant Jennifer Coughlan of Mathematica Policy Research.

"P4P may be difficult to implement in markets like Miami that are dominated by small physician practices, and about one out of three U.S. physicians still practice solo or in a two-physician group," Bodenheimer said.

Other key findings of the study include:

• Physicians in the 12 HSC communities are divided among P4P supporters, skeptics—wait-and-seers—and resisters. In several communities, physician leaders are concerned that the amount of money at stake will neither justify the extra work for frontline physicians nor cover extra expenses of physician organizations.
• Physician acceptance of P4P likely will be influenced by whether health plans commit additional funds to reward improved quality. Physicians often believe that health plans are not putting additional dollars into P4P but are taking money from some providers to pay others. P4P opponents may see the programs as "no pay for no performance"—a health plan strategy to pay physicians less.
• While frontline physician attitudes toward P4P vary widely, many physician leaders find P4P acceptable if all health plans have the same program. The prevailing model of physicians facing different measures and rules from different plans is seen as an untenable option.
• In many markets, most physicians do not belong to physician organizations. In those cases, the numbers of patients with a particular condition enrolled in a particular health plan seeing a particular physician are so small that quality measurement is virtually meaningless and payments per physician will be too small to gain physician acceptance and influence practice patterns.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.