Health Care Reform and Pay-for-Performance: Prognosis Uncertain

Atta, Mohamed G. MD, MPH

doi: 10.1097/01.NEP.0000394218.48106.43

While certain provisions of the Patient Protection and Affordable Care Act aim to improve quality and lower costs through pay-for-performance, the attainment of these goals is not a sure thing.

Two of these provisions are to be implemented in 2012. The first, effective Jan. 1, 2012, provides incentives for the formation of accountable care organizations (ACOs).

ACOs promote care coordination and quality improvement, with an eye toward the prevention of disease, the avoidance of duplicative efforts, and the reduction of unnecessary hospital admissions. If accountable care organizations provide high-quality care at lower costs to the health care system, they can share in the savings.

The second provision, which deals with “linking payment to quality outcomes,” offers hospitals financial incentives to improve quality of care. Hospital performance is to be publicly reported, beginning with measures related to heart attack, heart failure, pneumonia, surgical care, and health care-associated infections. The provision is to apply to discharges occurring on or after Oct. 1, 2012.

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Accountable Care Organizations

At first blush, disease prevention measures, which are fundamental to an integrated health system, would be expected to improve our nation's health while also reducing the cost incurred by unnecessary visits to the emergency room and multiple hospital admissions. However, that is easier said than done.

While the turn of the 20th century saw success in preventing acute illnesses, today we are dealing with complex chronic diseases, potentially making prevention much more difficult. In terms of cancer, for example, only a couple cancer types can be prevented currently by the limited number of approved vaccines.

Most chronic conditions, such as hypertension, diabetes, kidney disease, and even cancers, are asymptomatic, and there is no pressing reason for patients to address them immediately. Indeed, many people do not visit a physician unless they are sick or in pain.

Also, incentives to provide preventive services may not be aligned across all stakeholders: patients, hospitals, physicians, and insurance companies. Our nation has multiple chronic conditions that, unfortunately, are not tackled well by physicians.

Take hypertension, which affects about 70 million individuals in the United States. While this condition is a major risk factor for heart and kidney disease, a significant proportion of primary care physicians do not address it until diastolic blood pressure has risen above 90 mmHg.

Type 2 diabetes also is on the rise, driven by the increasing prevalence of obesity. The condition is even being diagnosed in young children. But primary care providers are only reimbursed for treating disease codes and prescribing medications, not for counseling patients on lifestyle issues or on how to prevent obesity. Providers are practically punished for managing these chronic issues.

Therefore, it is imperative that all stakeholders are incentivized to provide preventive care. Physicians must be able to offer these services at the right time for the patient.

The Current Procedural Terminology (CPT) coding system should support this flexibility by enabling physicians and other health care professionals to accurately report all preventive and problem-focused services provided in a single visit.

The CPT coding system should contain all codes and modifiers necessary to create a transparent claims listing of these services. Accurate reporting and recognition of preventive care will allow for the measurement of its long-term benefits.

In addition, beneficiaries should be rewarded if they follow preventive measures. This reward can come in the form of premium discounts.

Since offering preventive services may not be of value to private insurance companies, an exchange system establishing a large pool of low-risk beneficiaries who are shared among providers may prove such an incentive.

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Linking Payment to Quality

Under the provision offering financial incentives to hospitals for quality improvement, physicians can not collect the full returns on their own efforts to improve quality. As a result, there is the potential for free rides on the efforts of others. Incentives must target individuals, not hospitals or practice groups, in order to achieve the intended results.

Such programs should consider both high and low performers. Low performers may show the most relative improvement, but their incentives will remain low in a system based solely on absolute achievement. Relative as well as absolute performance should be rewarded.

In addition, it is imperative to link process-of-care measures not just to quality-of-care measures, but to outcomes measures as well. Linking the two is likely to prevent some of the negative aspects of each, such as the potential for gaming the system and the possible rarity of a particular outcome.

As one may expect, the size of an incentive is probably important in improving quality. An incentive of at least 5% of a physician's capitation income may positively influence behavior, as one qualitative study suggested, compared with the limited or nonexistent effect of a small incentive. Similarly, even a large incentive may lose influence if diluted by multiple insurers.

The timing of feedback may be just as critical. For example, an end-of-year incentive may negatively influence physicians’ practice behaviors compared with a concurrent or intermittent incentive. The lack of awareness of the intervention and the infrequency of performance feedback seem to impinge upon its success.

In their current form, it appears that the pay-for-performance provisions of the Patient Protection and Affordable Care Act may not accomplish the desired end. How these provisions -ultimately will be implemented and what effect they will have remain to be seen.

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1. Petersen LA, Woodard LD, Urech T, Daw C, Sookanan S. Does pay-for-performance improve the quality of health care? Ann Intern Med 2006;145:265-272.
2. Hyman DJ, Pavlik VN. Self-reported hypertension treatment practices among primary care physicians: blood pressure thresholds, drug choices, and the role of guidelines and evidence-based medicine. Arch Intern Med 2000;160:2281-2286.
© 2011 Lippincott Williams & Wilkins, Inc.