What’s next for doctors if pay for performance fails?

I recently pointed to a BMJ study concluding that pay for performance doesn’t seem to motivate doctors.  It has been picking up steam in major media with TIME, for instance, saying, “Money isn’t everything, even to doctors.”

So much is riding on the concept of pay for performance, that it’s hard to fathom what other options there are should it fail.  And there’s mounting evidence that it will.

Aaron Carroll, a pediatrician at the University of Indiana, and regular contributor to KevinMD.com, ponders the options.

First, he comments on why the performance incentives in the NHS failed:

Perhaps the doctors were already improving without the program. If that’s the case, though, then you don’t need economic incentives. It’s possible the incentives were too low. But I don’t think many will propose more than a 25% bonus. It’s also possible that the benchmarks which define success were too low and therefore didn’t improve outcomes. There’s no scientific reason to think that the recommendations weren’t appropriate, however. More likely, it’s what I’ve said before. Changing physician behavior is hard.

So, if money can’t motivate doctors, what’s next?  Physicians aren’t going to like what Dr. Carroll has to say.   Sticks may have to be employed:

I actually think we need to use sticks as well as carrots.  We should stop reimbursing so much for stuff we’d like to discourage.

To put it another way, I think if we stopped paying so much for procedures, we would do less procedures.  But it you can make a lot ordering labs or make a lot not ordering labs, then why change behavior?

Here’s another way of looking at it.  If I can see 20 patients a day, and you offer to increase my pay 5% if I do an awesome job, I could work harder, hire people, and do QI to try and make 5% more.  Or, I could just see 21 patients a day.  Guess which I’ll do.  And the latter will increase costs.


We need to pursue a team-based approach to patient care, which Accountable Care Organizations and Medical Homes promote, and change the way physician practices are structured.  Physicians can’t do it by themselves.  Rather than punishing doctors, provide them with the necessary support staff to better manage chronic diseases and outreach to patients. And that’s going to cost money, at least in the short term.

Spending more money for better care is not a popular political stance these days, but it’s what needs to happen if we truly want better care for our patients.

 is an internal medicine physician and on the Board of Contributors at USA Today.  He is founder and editor of KevinMD.com, also on FacebookTwitterGoogle+, and LinkedIn.

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  • http://drpullen.com medical blog

    OF the things yiou mention the only one that has much chance of working is to pay less for things you want to have physicians do less. If a CT angiogram makes a cardiologist lots of money, and takes almost no time or effort on their part, he’s going to do lots of them. If he can make more for spending time managing CHF then that’s more likely to be an emphasis.

    • pcp

      Exactly. Have CMS pay for expensive procedures the same way they do for E&M codes: overhead minus 10%. If the cardiologist loses money on every CT angiogram, he’ll do a LOT less.

  • jsmith

    Sorry, Kevin, but ACOs and PCMHs are also a shot in the dark. Would they improve care? Maybe. Would they cost more money? Well, PCMHs would certainly require more resources in primary care. Maybe this would be offset by hospital savings in an ACO, maybe not. Likely it would vary by area. Would ACOs and PCMHs together both save money and improve care? Let’s just say I wouldn’t bet the farm on it.

    • Kevin

      You’re right, the jury is still out.

      But if you read Gawande’s most recent piece, the team-based approach seems to be the way to go, and has some promising data behind it:


      • pcp

        Until Dr. Gawande is willing to address the findings by the Mass. Attorney General about the role of the institution where he practices in keeping medical costs high in that state, his standing as an expert on health care financing remains compromised.

      • CSmith MD

        It appears cost-effective for the most uber-expensive patients who live in ERs and ICUs but you can’t extrpolate it to a general population.

      • http://www.davisliumd.blogspot.com Davis Liu, MD

        Team based care and shedding the myth of the heroic doctor doing everything is where American medicine needs to be to figure out the cost, quality, and access issues. While I believe those who feel ACOs will actually cause true reduction in health care expenses have little evidence, I also believe that better quality and access will occur, if done correctly, in restructuring physician practices to promote team based care.

  • http://www.hopestreetgroup.org/index.jspa Joy Twesigye

    Changing anyone’s behavior is difficult—Unfortunately there is so much change that needs to happen in health care right now that it can be overwhelming. I appreciate your perspective that P4P may not be the silver bullet once thought. You mentioned that a P4P initiative failed in the NHS. Do you think policy actors have taken the time to digest this fact and alter any P4P plans in the US?

    It seems like the work of the new CMS based Innovation Center needs to be prioritized as it has the potential to sort out which payment models will work the best in our health system.

    We lay out specifics on how to foster an environment in which innovative practice models, payment structures, and advances in technology can be tested, measured, and diffused more rapidly at http://www.hopestreetgroup.org/docs/DOC-2476

  • rezmed09

    Are we talking about pay for performance in primary care? Who cares? Primary care is a dying medical specialty in this country.

    Offering a free fully functioning EMR system that reminds providers to do all the PI indicators on their patients, that automatically bills might help. It makes too much sense and is too socialistic.

    • pj

      “Primary care is a dying medical specialty in this country.”

      That is absoultely false.

  • Thom Walsh

    The evidence is pretty clear that paying physicians less for certain procedures leads to a behavioral response that increases societal health care costs. Physicians respond to less payment by increasing the volume of services performed. See http://bit.ly/f5j6p7 and numerous others including Orszag’s CBO report on the topic.

    • jsmith

      Good point.

  • soloFP

    The trend in my area is to have prior auth for CTs, MRIs, Stress echos, and some other procedures done by the PCP to keep costs down. In addition, one health plan charges docs a monthly adminstrative fee of an average of $250 a month just to be in network. Other plans keep the fee schedules very low, with the 99213 range in my area from $40-$71, with 75% of the plans at the $56.50 average.

    • John Ryan

      I am not going to relish participating in any program (even if it increases payments) that increases the mind-numbing amount of administrative paperwork I have to do for CMS and the insurance companies.

      And by the way, those same CMS & insurance clerks that harass me with pre-certs and prior auths multiple times daily — I can play that game much better than you. In fact, I like the challenge of beating you using your own rules. Any knowing it eats up more of your obscene profits, makes me feel even better.

  • http://www.drdialogue.com Juliet K. Mavromatis, MD

    To take your point one step further–primary care practices that qualify as “medical homes” according to NCQA criteria are in fact operating under the notion that “pay for performance” should result in improved care for patients with chronic illness. To quality a practice is required to report performance on chronic illness care. As you note, studies have been mixed in their demonstration that these measures actually meaningfully improve outcomes. I agree with you–we need to compensate primary care physicians better and provide financial support for transformation to Medical Home type practices. Most primary care practices are operating at full capacity already and simply cannot afford the time or expense it requires to implement the types of changes that it requires to better manage chronic illness. My advice –first compensate primary care better, then later implement pay for performance–not vice versa.

    • jsmith

      Very well said, particularly that a “notion” is not a fact.

  • http://mikelangloislicsw.wordpress.com Mike Langlois, LICSW

    Hi Kevin, two questions:

    1. When you say ACO are you saying it is synonymous with “global payment structure?”

    2. Could you offer your perspective on the behavioral health provider here, psychiatrists, social workers and psychologists in private practice, where weekly psychotherapy may not fit the ACO norms. How might they manage to stay viable if Fee-for-Service goes away? If they can’t, what do you suggest they do?



  • http://www.MDWhistleblower.blogspot.com Michael Kirsch, M.D.

    Pay-for-Performance has already failed as it does not increase medical quality, which is its stated mission. It is more silly documentation for us to endure, with the hope that the government or insurance companies will throw us a few coins. Does any physician actually think that P4P improves medical care?

  • Bryan G. Laura, M.D.

    “Pay for performance”, from Medicare? Reminds me of champagne dreams on a beer budget. How about “performance for pay.” Or maybe we could say “put up or shut up.” Instead of P4P we could have PUSU, and in the interest of time/efficiency/costs/quality, shorten it to PUS.
    I kinda like that. It sounds like the body’s natural reaction to that which it recognizes as bad.
    “Performance for pay,” say it enough times and you might actually believe it.
    In the future, anytime some payer says P4P, respond with PUS.
    Have fun with it, it feels good.

  • http://www.healthscareonline.com Richard Young, MD

    The British should be admired for actually paying a real incentive to improve quality, and then having the rigor to measure the results of their national experiment. The Medicare 1% to 2% incentive programs are a joke.

    I’d say they’re still sorting out the results of their study. Clearly quality improved as measured by many processes of care. How much P4P had to do with it is debatable, but it would be silly to say it had nothing to do with improved quality. On a practical level, many of the surgeries used the incentive money to hire more nurses to do the chronic and preventive care checklists. Some patients grumbled at responding to a litanny of letters generated by the EMRs of the Primary Care Trusts to see their GP about some goal that wasn’t met.

    Another pending analysis is the cost-effectiveness of the UK P4P approach. What was the bang for the buck (pound?, Euro?) of paying a nurse to fuss at a diabetic patient to take his medicines so his A1C drops from 8.1 to 7.5?

    The other concept not mentioned in this thread is humility. There are just some patients who will never reach a treat-to-target goal no matter how much the patient and physician try. How much society wants to pay physicians to keep adding more expensive medicines in these difficult cases is a discussion we need to have.

  • gzuckier

    Unfortunately, such programs as capitation or these newfangled variations are always going to end up at the same brick wall: no matter how you adjust for comorbidities and disease stages and so on, in the end it will always be more effective to take on only healthier patients than to do a great job on sicker patients. That’s why we’re still stuck in this trap of paying for procedures rather than outcomes, and why we’re still trying to figure out how to get healthcare to people with serious chronic illnesses who can’t manage to get themselves into a group large enough that insurers can average out the risk.

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