Study: Physician pay-for-performance produces mixed results

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A new study suggests that paying physicians to meet set performance targets in their practice may not be as effective as hoped, benefiting already high performing doctors the most financially, even though their performance increased the least, according to the Oct. 12th issue of JAMA.
The idea does make some sense. After all, pay-for-performance is a model used in many other industries. Despite its seeming mixed effectiveness in healthcare, a good deal of health plans and purchasers in this country are beginning to test such models, according to background information in the article. However, most of these programs are in the early stages of trial, evaluation, and adjustment. Little formal research has been done on pay-for-performance, and that little bit of research has come out in support of the idea so far.

The study focused on PacificCare, one of the biggest health plans in the country, which began a prototype pay-for-performance program. Starting in 2003, the health plan began paying bonuses to medical groups if they met or improved upon set quality targets in 10 clinical and service areas. For the study, the performance of this California-based group was compared to another in the Pacific Northwest. The study authors looked at quality reports from October 2001 to April 2004 from nearly 300 physician organizations, in the following areas: cervical cancer screening, mammography, and hemoglobin A1c testing.

Based on these groupings, the increases in quality were: Cervical-cancer screenings rose 5.3 percent for physicians partaking in the bonus incentive program, with physicians not included improving 1.7 percent. Physicians improved quality for mammography by 1.9 percent in the quality plan, whereas other doctors increased quality only by 0.2 percent. The study found that Hemoglobin-A testing improved at the same rate for both groups, at 2.1 percent.

For all three measures, physician groups with baseline performance at or above the performance threshold for receipt of a bonus improved the least but garnered the largest share of the bonus payments.

"Physician groups whose performance was initially lowest improved the most, whereas physician groups that had previously achieved the targeted level of performance improved the least," the study authors said. Adding, "Our findings give rise to a number of speculations about the effects of pay-for-performance. First, groups with baseline performance already above the targeted threshold appeared to understand that they needed only to maintain the status quo to receive the bonus payments. More surprising, perhaps, is that low-performing groups improved as much as they did, given that their short-run chances of receiving a bonus were likely to be low. One possibility is that the groups viewed the QIP as a larger signal of a changing environment in which they would face increasing pressure to improve their care systems and decided to begin moving in that direction."

The authors indicated that paying explicitly for quality improvement might readjust the incentives for high-performing and low-performing groups, with the aim of distributing bonus dollars more toward those with room for improvement in performance. This might bring about the hoped for benefits of such programs.
The New York Health Research Organization provided funding for the JAMA report.