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Pay for Performance in Orthopaedic Surgery

Pierce, Read, G; Bozic, Kevin, J; Bradford, David, S

Section Editor(s): Bozic, Kevin J MD, MBA, Guest Editor

Clinical Orthopaedics and Related Research: April 2007 - Volume 457 - Issue - p 87-95
doi: 10.1097/BLO.0b013e3180399418
SECTION I: SYMPOSIUM: Health Policy and Practice Management Issues in Orthopaedic Surgery

In recent decades American medicine has undergone tremendous changes. Numerous reimbursement and systems approaches to controlling medical inflation and improving quality have failed to provide cost-effective, high-quality health care in most circumstances. Public and private payers are currently implementing pay for performance, a new reimursement method linking physician pay to evidence of adherence to performance measures, to constrain costs, encourage efficiency, and maximize value for health care dollars. High-quality research regarding pay for performance and its impact is scarce, particularly in orthopaedic surgery. Although supporters argue pay for performance will remedy the fragmented, costly delivery of health services in the United States, skeptics raise concerns about disagreement over quality guidelines, financial implications for providers and hospitals, inadequate infrastructure, public reporting, system gaming, and physician support. Our survey of orthopaedic surgeons reveals limited understanding of pay for performance, marked skepticism of nonphysician stakeholders' intentions, and a strong desire for greater clinician involvement in shaping the pay for performance movement. As pay for performance will likely be a long-term change that will have an impact on every orthopaedic surgeon, clinician awareness and participation will be fundamental in creating successful pay for performance programs.

From the University of California, San Francisco, CA.

Each author certifies that he or she has no commercial associations (eg, consultancies, stock ownership, equity interest, patent/licensing arrangements, etc) that might pose a conflict of interest in connection with the submitted article.

Correspondence to: David S. Bradford, MD, 500 Parnassus Avenue, MU320, Box 0728, San Francisco, CA 94143-0728. Phone: 415-353-2216; Fax: 415-476-1304; E-mail:

American medicine has undergone tremendous change in the last several decades. In addition to exciting advances in basic and clinical sciences, major changes in health care policy and finance have reshaped physician practice and delivery of services. Focus on physician and hospital reimbursement stems largely from rapidly rising medical costs, which have outpaced growth in gross domestic product (GDP) in almost every year since 1960.37

Managed care networks, prospective payment systems, and capitation-heralded throughout the 1980s and 1990s as market-driven solutions that would contain costs-have failed most stakeholders.48 Payers in private and public sectors are now considering alternative approaches to cost control. An emerging, popular strategy is pay for performance (P4P), a reimbursement method that may substantially influence the practice of orthopaedic surgery in the United States.

Pay for performance seeks to link physician reimbursement to evidence of adherence to performance measures. Physicians and hospitals who outperform their peers, or who demonstrate improving adherence to evidence-based practice over time, would receive incentive payments. Those who do not practice evidence-based medicine (EBM) could have their reimbursements reduced. Thus, payment is not based solely on the provision of care, but rather on the provision of perceived higher quality care.

Because P4P is a new and poorly studied policy tool that may profoundly change medical and surgical practice in the US, we explore P4P and analyze its likely impacts on orthopaedic surgery. Specifically, we address six areas of interest and concern. First, we discuss factors underlying dissatisfaction with current reimbursement strategies and explore the historical origins of P4P as an alternative. Second, we investigate existing P4P approaches to discern how performance may be defined, what financial rewards are at stake, and how rewards are linked to performance measures. Third, we assess which stakeholders support P4P and discuss how these groups may impact health policy related to reimbursement. Fourth, we review the state of research surrounding P4P and analyze existing data related to its effectiveness as a reimbursement strategy in orthopaedic surgery. Fifth, we present leading arguments among health policy researchers about the potential advantages, limitations, and negative impacts of P4P on physicians and health care delivery systems. Sixth, we analyze how thought leaders in orthopaedic surgery perceive P4P.

In preparing this manuscript, we performed a PubMed search in November 2005 for “P4P,” “pay for performance,” and “quality improvement AND pay for performance,” which returned 23, 619, and 32 articles, respectively (adding “AND orthopaedic surgery” to each criterion above returned zero articles each time). One of us (RGP) subsequently reviewed each article title and abstract (when available) returned by all searches to select a subset of 87 articles and books most closely related to the search criteria and six areas of interest discussed above. We then reviewed all references cited by articles and books in this subset, and added any references with titles addressing our six areas of interest. All references listed in this manuscript were drawn from this modified subset, and in the authors' opinion represent the most recent, applicable, and original works addressing pay for performance and P4P in orthopaedic surgery at the end of 2005.

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A History of Reimbursement Failures in the US

Current physician and hospital reimbursement systems provide incentives for increasing the volume and quantity of health care services provided, rather than rewarding quality or performance, and at times reward substandard care.45 Insurance carriers often will not pay for new practices that reduce errors, yet providers can bill for the additional services required when patients are injured by human or systems failures.30

Although physicians generally strive to practice high-quality medicine, they have few tools to assist them in doing so across all delivery sites,31 and they face numerous financial challenges. Jones and Hauser28 and Barry3 have described modern surgical practice as: intense competition among providers; increased pressure from payers regarding cost, appropriateness of care, and claims administration; soaring personnel costs; shrinking operating and capital budgets; supply chain inefficiencies; decreased payments for services to government program beneficiaries; and increased use of expensive medical technologies.

Pay for performance has gained popularity recently, in part due to previous reimbursement arrangements having failed to constrain medical inflation, encourage efficiency, and maximize value for a given amount of health care dollars.48 For decades, private and public payers reimbursed physicians according to each doctor's actual or customary fee for a service (FFS) or the prevailing fee in his or her geographic area. During this period, Medicare payments to physicians grew at an unsustainable average rate of more than 14 percent annually.25 Benchmarking studies have shown performance was low relative to accepted standards and adherence to recommended treatment guidelines varied across regions and providers.20

The adoption of diagnosis-related groups (DRGs) in the early 1970s by Medicare and private insurers was expected to restrain overspending in health care. Whereas previous reimbursement arrangements paid hospitals for each service rendered (each test ordered, every procedure under-taken, etc) based on a percent of billed charges, thereby encouraging providers to do more than sometimes necessary for patient care, DRGs reimbursed hospitals a fixed case rate payment. DRG categories were created by grouping patients into diagnostic categories based on similarities in clinical characteristics and resource utilization. The goal was to incentivize hospitals to control costs by improving the efficiency of health care delivery, including limiting utilization of expensive tests and devices and reducing length of stay. However, evidence on success is mixed. In the United States, DRGs seem to have decreased the growth rate of costs in the Medicare and Medicaid programs.7 However, adoption of DRGs in Germany led to decreased length of stay but increased hospital admissions, thus raising the number of hospital days per 1000 members of the general population and yielding minimal net change in costs.7 Additionally, studies in the United States have suggested DRG-induced cost shifting between sectors of the health care market has greatly limited net cost reductions.7 For instance, many hospitals and providers aggressively market their services to commercially insured patients, whose insurance pays the hospital based on a percent of billed charges, in order to offset losses incurred by case rate payers such as Medicare and Medicaid.

In the early 1990s, Medicare payments for physician services were also changed from fee for service to a fixed fee schedule. The Omnibus Budget Reconciliation Act of 1989 produced a fee schedule to decouple Medicare's payment rates from the physicians' usual and customary charges for services. A group of researchers from the Harvard School of Public Health developed a methodology for calculating a resource-based relative value scale (RBRVS) as a function of physician's work input, the opportunity cost of specialty training, and the relative practice costs for each specialty (including professional malpractice liability expense).24 The RBRVS fee schedule has been heavily criticized since its introduction, and many health policy makers point out although the system was created to control escalating costs associated with physician services, the RBRVS fee schedule continues to reward the quantity rather than quality of health care services provided.

Such failures gave rise to health maintenance organizations (HMOs) as systems-based approaches to cost containment. Health maintenance organizations rely on numerous strategies to affect supply of care (capitated payments, salaries, strict budgets, constraints on technology use, and stringent contract arrangements) to create incentives or requirements for physician behavior that decrease use of health services. Evidence in the United States and Europe suggests these approaches effectively decrease hospital admissions and outpatient physician contacts per person compared with FFS arrangements.7,35 Despite evidence of early success in controlling health spending, the HMO model has been heavily criticized in recent years largely because of the “toxic combination” of perverse or nonexistent financial incentives to coordinate care with inadequate information about how to improve quality. Since the 1990s, patients and providers have expressed their dissatisfaction with the managed care approach.23

During the same period, an increase in the quantity and quality of clinical research enhanced clinicians' ability to evaluate which drugs, devices, and protocols provide the most benefit to patients, giving rise to EBM and greater scrutiny of physician behavior.7 Two publications by the Institute of Medicine (IOM)-“To Err is Human” in 200029 and “Crossing the Quality Chasm” in 200126-galvanized concern about quality failures.52 The authors of these reports observed current payment incentives poorly facilitate the actions needed to systematically improve the quality of health care among health professionals motivated to provide the best care possible.33 Numerous recent studies have similarly concluded the quality of health care is often variable, inadequate, and noncompliant with best practices.1,20,27 Policymakers have concluded systems failures, rather than incompetent physicians, hamper delivery of high quality health care, and the most effective method for improvement is to change the current systems of services delivery and reimbursement.27,30

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Pay for Performance-Origins and Applications

The IOM reports led to the realization that an emphasis on quality is lacking in the US health care system, and a return to arguments made by Walter McClure in the 1970s that financial incentives to reward quality are the best means of obtaining high-quality care for a given number of dollars.33 His “Buy Right” theory was reborn as P4P, or “value-based purchasing,” and first surfaced in 2002 with the formation of the Leapfrog Group, a coalition of large corporations seeking higher quality, cost-effective care for their employees.33 In the past 5 years, numerous public and private payers have reexamined their reimbursement strategies, and are presently implementing P4P programs.

Among the major stakeholders supporting P4P studies and pilot programs are the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), Centers for Medicare and Medicaid Services (CMS), Agency for Healthcare Research and Quality (AHRQ), Robert Wood Johnson Foundation, American Hospital Association (AHA), consumer groups such as the American Association of Retired Persons (AARP), and private payers including the Integrated Healthcare Association (a collaboration of 6 health plans in California), Blue Cross of Hawaii, and the UnitedHealth Group.27,34,45,51,52

All of these programs use various, often similar, clinical and service measures to compare physician and hospital performance. Measures include safety of hospitalized patients, screening rates for common diseases and childhood immunizations, adherence to evidence-based guidelines for disease management, achievement of specific patient-satisfaction scores, efficient resource utilization, and integration of health information technologies in hospitals and office practices. Physicians performing above certain thresholds on these measures (often the 75th or 90th percentile) are eligible to earn bonuses of 2% to 10% (occasionally more) of their typical reimbursement, and receive designation as “excellent,” “superior” or “preferred” providers.27,33,34,45,48,51,52 In some cases, performance data are shared only with providers, whereas in others they are made publicly available.27 Through these designations, payers may incentivize patient referrals to perceived higher quality providers by specifically recommending physicians and hospitals from a certain “tier,” adjusting copay rates to drive patients toward or away from certain providers, and using public rankings to influence decisions about access to care.

One of the largest ongoing P4P programs is the CMS/Premier Hospital Quality Incentive Demonstration Project, a 3-year effort started in 2004. The program includes nearly 300 hospitals that voluntarily submit electronic claims data on patients treated for acute myocardial infarction, heart failure, community-acquired pneumonia, coronary artery bypass, and hip or knee replacements. Data are measured against evidence-based performance standards. At the end of each year hospitals are eligible to receive an additional 2% in Medicare payments for each condition in which they score in the top decile. An extra 1% bonus is given to hospitals in the second decile. All hospitals in the top 50% receive public recognition. Performance data are also published yearly on the CMS website. In the third and final year of the program, hospitals performing in the lowest quintile are subject to reductions in reimbursement of 1% to 2%.20,27,32,42,45

In February 2005, CMS began a similar outpatient program. The Medicare Physician Group Practice Demonstration involves 10 medical groups representing 5000 physicians. The project will provide bonuses as great as 5%, in addition to standard FFS reimbursements, based on 32 quality indicators such as blood-pressure management, beta-blocker therapy use, and colorectal cancer screening. Performance targets will incorporate how much providers save Medicare and how well they perform on the quality measures.42 If successful, such programs could usher in national P4P incentives for all Medicare patients and providers,48 especially as Congress aggressively seeks to limit Medicare spending growth.25

Private payers are following suit. For the past several years, the UnitedHealth Group Company has refined quality and cost-efficiency measures based on claims data and validated best-practice guidelines. Currently, the company is finalizing sophisticated analysis protocols for comparing orthopaedists on measures including case load and mix, operation rate within 30 days of diagnosis or referral, appropriate preoperative imaging, preoperative and postoperative physical therapy rates, 6 and 12 month reoperation rates, complication rates, and cost ratios. These data will allow for public, detailed comparison of provider performance against peers and competitors, and across regions. The company currently provides preference designations to surgeons with superior performance, but presently does not plan to reduce reimbursements for those scoring below average.6 As the company works directly with 55 million patients, 450,000 physicians, and 4000 hospitals, network-wide implementation of these P4P incentives will have a substantial impact on orthopaedic surgeons.

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Available Data about Pay for Performance

Because P4P is a relatively new approach to reimbursement, high-quality research regarding its impact on quality and cost is scarce. To date, most P4P pilot programs and data generated by such programs apply to primary care fields and the subspecialties of internal medicine. Aside from the CMS/Premier pilot project, which includes hospital performance data on hip and knee replacement procedures, little or no public data exist on P4P in orthopaedics.27,43

Several studies performed since 2000 offer several important insights.4,27,43,46,52 First, the findings of these authors support existing data that suggest wide variation in the quality of health care across different geographic regions in the US, and geography seems to correlate better with quality variation than hospital size or academic versus nonacademic status. Second, within a given health system, the provision of high-quality care on one measure or several related measures does not predict excellence on all measures.27 Third, measuring and rewarding specific outcomes improves performance on the quality indicators of interest.46 Research by Williams et al52 indicates hospitals with worse performance initially tend to improve faster than hospitals with high initial performance. In addition, some evidence from large quality databases indicates a general trend of overall quality improvement in health care since the late 1990s.43,52 Lastly, attempts to ascertain whether focus on a few health indicators causes worsening performance on other, unmeasured outcomes have revealed little or no detriment to overall care.4,43

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Implications-Potential Benefits, Limitations, and Drawbacks of P4P Programs

Enthusiastic supporters of P4P argue it will increase cooperation between major stakeholders, thereby remedying the fragmented, costly delivery of health services in the US.13,21,31 A recent MedVantage study outlined several areas of improvement: (1) reduced clinical practice variation through improved adherence to known best-practice guidelines; (2) catalyzed investment in information technologies that will decrease medical errors and improve patient safety through reminder and alert systems at the point of care; (3) reduced acute exacerbations by using measures to help to determine the need for hospital stays and emergency room visits, optimizing care of chronically ill patients, and managing patients to prevent readmission after an acute stay; (4) increased transparency of provider and hospital performance, which will improve quality and efficiency; (5) improved health plan competition on and investment in initiatives emphasizing quality, not just cost reduction; and (6) greater incentives for preventive care.45

New data suggest this optimism may be well-founded.32 Recently published outcomes related to pneumonia and heart bypass surgery care provided by hospitals participating in the CMS/Premier pilot project reveal tying Medicare hospital payments to quality of care measures would have reduced the program's hospital costs by as much as $1 billion for the care of 75,000 Medicare beneficiaries. According to the study, hospital costs for patients receiving the highest level of recommended care for pneumonia were $8,412 per patient, compared with costs of $10,298 per patient for those receiving the lowest number of care measures. For heart bypass patients, the cost for patients receiving the lowest number of care measures was $41,539, compared with $30,061 for those receiving the highest application of care measures. In addition, implementing the recommended care measures would have resulted in 3,000 fewer deaths, 6,000 fewer medical complications, 6,000 fewer hospital readmissions, and 500,000 fewer days in the hospital.32

According to advocates, the key to such radical improvement is the novel incentive approach in P4Ps: let patients and payers compare the quality of physician and hospital services fairly and publicly (valued by consumerist patients and employers), reward providers financially for high quality work (valued by physicians), and ultimately decrease cost by eliminating inefficient over- and underuse of health services often provided inappropriately (desired by payers).13,26,29,33

However, considerable disagreement exists between stakeholders about how to define, measure, and reward quality.30,51 Payers and financers of health care (eg, large employers, CMS) want transparent, timely access to clinician performance to direct patients and reimbursements to effective, efficient health services.4,18,21,45 To assess performance, payers and financers often rely on self-collected claims data or chart reviews at selected provider practices and hospitals. Payers firmly believe in the business principle of competition, which implies there must be winners and losers, a relative anathema to physicians.51

Physicians traditionally view quality as emanating from training and licensure, and identify changing reimbursements as an obstacle rather than an incentive for quality improvement.4 Providers sometimes disagree about types of care they are best suited to perform. For example, orthopaedic surgeons frequently order and interpret imaging studies related to musculoskeletal disease. Some radiologists contend their training and licensure process provides greater competency, and thus higher quality, when interpreting imaging studies. Pay for performance programs could add financial implications to this debate if policy makers recommend giving control of imaging and related reimbursement dollars to members of one specialty or the other.6

Consumers of health care services (employers and patients) hold conflicting preferences about quality measures. A recent poll found 80% of patients want a “Consumer Reports” ranking of physicians, yet 70% believe such programs will not improve quality. Most oppose increased pay for quality, citing high salaries, the Hippocratic Oath, and physicians' professional obligation to provide consistent, high quality care as reasons incentive payments to physicians are unethical or unneeded.12 Additionally, the impact of empowered health consumers may be overestimated. Patients frequently lack sufficient information, tools, and market power to be discriminating purchasers of high quality, low-cost health services, and often do not adequately account for complexities, such as case-mix adjustment, when evaluating quality measures.9,17 Given the substantial possibility of patient misunderstanding or misapplication of quality rankings and reports cards, physicians naturally worry about increased medicolegal liability as a result of public reporting.

Although EBM is a rapidly advancing field of research, comprehensive standards for medical practice are still decades away, and in some cases will not be possible. Surgical fields in particular present a major challenge to the rigorous methods of EBM, which ideally rely on results from randomized controlled trials (RCTs) to validate best practices. For many technologies and protocols in orthopaedic surgery, RCTs are not feasible because of cost, ethical considerations, inadequate blinding, or sample size requirements.10 This lack of Level 1 evidence on which to base performance measures often leads payers to use the proxy measures of cost and resource utilization (length of stay, postoperative infections, and reoperation rates) that may be poor markers of true quality.

Risk adjustment is challenging for all quality indicators, specifically outcomes-based performance measures (as opposed to process measures). It has been documented orthopaedic outcomes are difficult to measure and significantly influenced by patient characteristics.5,44,47,49 Therefore, outcomes-based performance measures need to be risk-adjusted carefully to account for case mix severity in order to avoid perverse incentives for patient deselection among providers. However, conventional risk-adjustment metrics, such as the Charlson index or DRG-based severity of illness scores, which attempt to quantify patient comor-bidities at admission in an effort to adjust for mortality and other outcomes, currently do not incorporate enough variables related to most orthopaedic conditions and procedures to provide appropriate risk adjustment.22,44 Though research efforts are underway to create more accurate models, lack of appropriate methods for risk adjustment could lead to misreporting of outcomes data (see discussion below) or reluctance by physicians and hospitals to provide care for patients with more complicated disorders. This type of selection bias is one of the unintended consequences of P4P programs that runs counter to the goals of improving quality and reducing costs in health care.

The level of financial incentive offered by payers, the source of funding, and whether this could represent payment withholding is a major concern for clinicians.21,23,30,42,45 Little scientific research exists to guide discussions about appropriate incentive levels, but some policymakers and industry leaders have recommended putting 20% or more of income at risk.21 Few payers are likely to increase reimbursement pools by this amount, implying most P4P incentives will be withheld from current levels of reimbursement. Therefore, physicians and hospitals performing below average on various quality measures will see their incomes decline. The impact of lower reimbursements on quality at these “second-tier” health systems is unknown, but fewer financial resources could exacerbate quality failures, rather than create incentives for improvement.4

Implementation of P4P will also require costly investments in information technology and creation of collection, processing, and validation systems currently unavailable in most health care organizations. Although some hospitals have undertaken this type of change, many physician groups cannot afford radical infrastructure improvements, thus posing a major barrier to P4P success.4,14,15,23,36,45,50

One effective means for encouraging investment and development is gainsharing, or offering physicians a portion of any net savings or increased earnings due to changes in their patterns of care delivery. However, critics raise concerns regarding the ethical implications of providing incentives to reduce costs by changing practice patterns and using less expensive technologies. Furthermore, gainsharing is illegal in most circumstances under current Stark and anti-kickback statutes, although Congress is considering relaxing these rules and CMS recently began the Medicare Hospital Gainsharing Demonstration Program to study new approaches to sharing cost savings with providers.2,8

Ultimately, the unintended consequences of poorly coordinated, unfair, and financially constraining P4P programs may be high. Disagreements about quality measures could lead to systems gaming (avoiding sick patients, distorting reported data, or under- or overproviding services) by physicians to avoid classification as second-tier or second-rate providers. This could perversely decrease quality, and perhaps increase cost as more time, energy, and administrative effort is devoted to system audits and regulation enforcement.15,17-19,21,25,40,43,45,51 Other issues that must be considered include the impact of withholding resources from lower quality providers, and the medicolegal implications of public reporting of quality measures.

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Opinion Survey of Leading Orthopaedists

To better characterize understanding and opinions about P4P among leading orthopaedic surgeons in the United States, we distributed an eight-question survey (see Appendix 1) to 164 orthopaedic thought leaders at academic and affiliated medical centers in 42 states and Puerto Rico. The response rate was 46% (76 surveys returned), thus allowing for reasonable generalization of results. Two surveys were returned unanswered, one with an attached statement declaring insufficient knowledge of P4P.

Like many physicians, most respondents (78%) were aware of P4P as a new reimbursement strategy (Fig 1). However, a similar number (73%) indicated lack of familiarity with P4P pilot programs in their academic institutions or local and/or regional health networks, and 95% believed orthopaedists in general have inadequate understanding of the P4P movement (Fig 1). Approximately 70% believed the basic principle of P4P-linking physician pay to quality improvement rather than cost containment-would likely win more physician support than previous reimbursement strategies, but 30% indicated P4P would not gain widespread physician acceptance (Fig 2). Ninety-one percent reported distrust of payers' (eg, CMS, large insurance companies) ability or intentions to use existing outcomes data for determining appropriate quality metrics (Fig 2). Although we did not provide a comments section, several respondents elaborated on the issue of mistrust, citing government incompetence, poor validity of industry quality measures, and inadequate risk adjustment as causes for concern.

Fig. 1

Fig. 1

Fig. 2

Fig. 2

In contrast, 57% of respondents indicated moderate conviction that standardized quality measures developed by a consensus group, including orthopaedists and professional medical societies, would lead to fair comparisons of providers and reimbursement policies based on quality adherence rather than cost reduction (Fig 2). Respondents were divided on whether public reporting of physician performance would be beneficial; 49% strongly or somewhat agreed, 51% strongly or somewhat disagreed (Fig 3). Nearly all (99%) believed orthopaedic surgeons should have greater involvement in shaping future P4P policies (Fig 3). We believe these findings are largely consistent with prior research addressing general knowledge about and perspectives on P4P among physicians, suggesting orthopaedists are neither ahead of nor behind their peers in other specialties.

Fig. 3

Fig. 3

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Despite its deficiencies, lack of widespread physician acceptance, and uncertainties regarding its impact on physician and consumer behavior and quality, P4P is poised to produce tremendous change in health care delivery and related reimbursements in the next few years. Health care purchasers, policy makers, patient advocacy groups, academics, insurers, and an increasing number of providers currently agree offering financial incentives to physicians for achieving specific quality benchmarks is the future of affordable, effective health care in the United States.11,16,31 Given the ongoing efforts by the CMS and private health plans (projected to include over 100 programs covering 60 million Americans by 2006),20,39 it is unlikely P4P will be a brief or limited approach.15 Two programs, Bridges to Excellence and California's Integrated Healthcare Association, are prepared to pay $250 million annually to physicians and hospitals. Some physician groups anticipate P4P rewards will account for as much as 10% to 15% of their total revenues in the near future.20 Other nations are implementing similar programs. The new contract between general practitioners in the United Kingdom and the country's National Health Service rewards providers who satisfy 76 quality indicators with up to 50% greater compensation.33,51

Presently, high quality research on P4P and its impact on care delivery, patient safety, physician behavior, and health care finance is limited. Much of the existing literature is speculative (ie, opinion pieces by policy experts) and is frequently biased according to whether the authors support or oppose P4P. Notably, the few studies attempting to correlate performance measures with outcomes through analysis of large clinical databases do not primarily address diseases and procedures common in orthopaedic surgery. We expect the first large, robust data set of interest for orthopaedists will arise from the CMS/Premier pilot project, which is currently collecting outcomes data on hip and knee replacement procedures at nearly 300 hospitals and is changing reimbursement rates each year based on related performance metrics.20,27,32,42,45

Research in this field will continue to face numerous challenges, including difficulties in defining quality measures, standardizing the level of financial reward available to providers, and differentiating P4P impacts across the health care landscape (hospitals versus physician groups versus community health networks, etc). In addition, little formal structure exists for supporting active research in this area. Unlike basic scientists, who can turn to the NIH for peer-reviewed funding, P4P policy researchers often must work with small budgets or under the auspices of private industry, physician groups, or consumer advocates-all of which may heavily bias study design and outcomes.

We believe more large investigations by CMS, like the CMS/Premier pilot project, will be needed to produce a sufficient quantity of high quality data across multiple health care settings and specialties. Such studies need to incorporate a much broader set of outcomes and performance measures, and physicians should be heavily involved in defining these measures.

Most policy experts agree orthopaedic surgery is ripe for P4P implementation. Administrators at the CMS are interested in controlling Medicare costs related to resource intensive orthopaedic procedures, such as total joint replacement and spinal fusion. In addition, Goldfield et al23 recently predicted the relatively homogeneous patient population seen by most orthopaedists may facilitate analysis of financial and quality factors, leading to rapid introduction of P4P programs affecting all orthopaedic surgeons.

Until recently, most professional medical societies have not sought effective partnership with policymakers and industry leaders who are shaping the future of P4P. The American Medical Association was largely silent on the subject of P4P until 2004, when it published several editorials expressing concerns about quality performance incentives and approved a strict policy requiring all P4P programs to adhere to a long list of guidelines.41 It is unlikely most P4P programs will meet all of these criteria, particularly without physician involvement in the creation and monitoring of all systems that measure and reward quality.23,38,40 To this end, in late 2005 the AMA reached an agreement with Congress to develop more than 100 clinically-relevant performance measures by the end of 2006. In response to a request for collaboration from the AMA, the American Academy of Orthopaedic Surgeons (AAOS) recently appointed an evidence-based practice guidelines oversight committee to assist with the development of orthopaedic-related practice guidelines and performance measures for use in P4P programs.

If P4P is to appeal to the widest possible set of stakeholders, quality and cost measures must be fair, sophisticated, and comprehensible.23 This will not be possible if orthopaedic surgeons remain uninterested or uninvolved in shaping current trends in health reimbursement. Pay for performance is not a panacea, but it offers the best option in the current era for balancing the autonomy critical for the practice of medicine with the accountability necessary for providing patients with safe, affordable, high-quality care.33,42

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APPENDIX 1. Survey Questions

N.B.-All questions offered “yes” and “no” as possible responses.

  • Question 1: I have heard about P4P before today.
  • Question 2:I am aware of P4P pilot programs occurring in my academic center or local/regional health care networks.
  • Question 3: I feel the majority of Orthopaedists in the US have adequate understanding of P4P, its goals, and its feasibility for impacting quality of care.
  • Question 4: Linking physician pay to quality improvement, rather than cost containment, will be more likely to win physician support than previous changes in reimbursement (capitation, etc).
  • Question 5: I believe payers (CMS, insurance companies, etc) have sufficient data about outcomes to appropriately determine metrics for evaluating quality health care.
  • Question 6: If a consensus group-including Orthopaedists and professional societies-developed standardized measures of quality care in Orthopaedics, I believe payers would use such standards fairly to compare and reimburse physicians based upon performance rather than cost containment.
  • Question 7: If payers compile data on the performance of individual physicians, provider groups, and hospitals, I believe the public would benefit from having access to such data.
  • Question 8: Orthopaedists, and physicians in general, should have greater involvement in shaping the P4P movement.
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