Pay for Performance Must Be Quality Issue, AMA Says

If pay for performance is a fast-moving train, then the AMA appears to have made a move to ensure it does not become a runaway. Following what was easily the most extensive and exhaustive debate of the AMA's policymaking meeting last month in Chicago, delegates approved detailed principles and guidelines for pay-for-performance programs. The principles and guidelines were part of an AMA Board of Trustees report and follow a white paper produced by a special task force convened last year by AMA Board Chair J. James Rohack, M.D.

During reference committee hearings prior to the convening of the House of Delegates, some physicians clearly expressed the desire that pay for performance—or P4P as it is known in shorthand—would go away. But the majority acknowledged that it is inevitable and focused attention on ensuring that P4P programs are not used as cost-cutting tools by government or private payers to penalize physicians.

“The members of the AMA are strongly supportive of quality-improvement efforts, and pay for performance is a potential quality tool,” said AMA Trustee John Armstrong, M.D., in a press conference after the house adopted the report. “But pay for performance must be designed so that the patient remains the focus, and the outcome is quality, using relevant quality-improvement measures.

“Is there a concern about pay for performance? There is a potential concern when there is another intent behind pay for performance,” Armstrong said. “Some so-called pay-for-performance programs are a lose/lose proposition for patients and their physicians, with the only benefit accruing to health insurers. We believe that pay-for-performance programs done properly have the potential to improve patient care, but if done improperly can harm patients.”

Few ideas in American medicine today are moving with as much momentum as P4P, the concept of paying hospitals and physicians for adhering to practice guidelines and meeting standards for quality improvement. It is part of a broad movement in both the public and private sectors toward the incorporation of “performance indicators,” an effort to create greater accountability and transparency in the practice of medicine.

Performance indicators are under development by organized medicine, including the AMA, as well as many private health plans, the federal government, and accrediting agencies. The federal Centers for Medicare and Medicaid Services recently announced a demonstration project for pay for performance (Psychiatric News, March 18). The concept has been greeted with suspicion by some physicians, however, and a great many uncertainties remain to be resolved before it becomes the norm.

Prominent among the concerns is the fact that public-sector dollars for reimbursing physicians come out of a finite budget, so that increases in payment are certain to be taken from somewhere else. And some fear that P4P can be used to penalize hospitals and physicians that fail to meet performance measures.

Also potentially problematic is that adherence to measures will require ability to track performance over time; physician practices that do not have electronic record collection will have to rely on office personnel to pull and review charts—a labor-intensive exercise that is likely to go uncompensated.

The principles and guidelines adopted by delegates last month mark an attempt to address these and other issues related to the adoption of pay for performance.

At the press conference, Armstrong emphasized that reservations about P4P, particularly as it may be implemented in the Medicare program, are tied to the AMA's longstanding, vociferous opposition to the current physician payment formula, especially the formula for calculating “sustainable growth rate.”

That component is built into the payment formula to compensate for increases in utilization of services by forcing a reduction in physician payments. Since introduction of P4P is likely to increase the volume of some appropriate services, the payment formula would then work to penalize physicians inappropriately.

“That formula is flawed at its foundation and does not reflect practice costs in any measure,” Armstrong said. “We see the negotiations on the sustainable growth rate as an important focus for access to care, and we see pay for performance as a potential tool for quality.”

Ultimately, P4P programs will require up-front resources, especially for technology required to track quality-improvement data.

“Health-information technology requires a significant investment,” he said. “Right now in the practice environment we have a flawed Medicare reimbursement formula and a liability crisis. The burdens in practice have become so extreme that it makes it hard for physicians to have the resources to invest in health-information technology.

“We cannot make [P4P programs] yet another unfunded mandate,” Armstrong said.

The board report stated, “Physician pay for performance (P4P) programs that are designed primarily to improve the effectiveness and safety of patient care may serve as a positive force in our health care system. Fair and ethical P4P programs are patient centered and link evidence-based performance measures to financial incentives.”

The report went on to enumerate the following five principles by which P4P programs should abide:

In addition, the House of Delegates also approved much lengthier and detailed “guidelines” to govern the intricate mechanisms of how P4P programs might work. Broad categories covered by the guidelines include quality of care, physician-patient relationship, physician participation, physician data and reporting, and program rewards.

“Pay-for-Performance Principles and Guidelines” is posted online at<www.amaassn.org/meetings/public/annual05/bot5a05.doc>.▪