Pay-for-performance must measure up

Physicians are smart to be wary when certain parties try to seize the rhetorical high ground. Such is the case with so-called pay-for-performance.

Both in the abstract and in the reassuring descriptions from government and private payers, pay-for-performance suggests that the best -- and who in medicine thinks of himself or herself as anything less? -- will reap the rewards that are their due. Even the rest -- whoever that might be -- can expect proper incentives to do the right thing. Meanwhile, the broader pitch to policy-makers, corporate payers and the public is of a cost-effective remedy that will reshape health care for the better.

And yet there is a dreary history to health plans' high-concept hard sells. How could anyone ever have found fault with something as wholesome as a "health maintenance organization"? Why quibble with what's "usual, reasonable and customary?" And what could be as fundamentally sound as a "sustainable growth rate"? HMO, URC and SGR: Meet PFP.

Delegates at the recent AMA Annual Meeting did what bitter front-line experience has taught them to do: They looked at what lurks beneath the high-sounding language of this latest new thing.

In crowded and lengthy sessions, the delegates affirmed a strong set of AMA policies on pay-for-performance. In contrast to the brief and bland phrase that inspired their action, the AMA's concerns take four pages of text to address how legitimate PFP should work, and the wording is blunt.

At its core are five guiding principles, unveiled earlier this year, which establish that an ethical and fair PFP program must:

• Ensure quality of care.
• Foster the patient-physician relationship.
• Offer voluntary physician participation.
• Use accurate data and fair reporting.
• Provide fair and equitable program incentives.

From that framework, the delegates also approved specifics that must -- the word appears more than 50 times in the guidelines -- be met. Altogether, the document leaves little doubt about medicine's deep and pervasive reservations about the details of PFP, ranging from the clear need for scientific soundness to the vagaries of patient noncompliance.

The AMA house, while neither rejecting nor endorsing pay-for-performance, also said firmly that the AMA would find it unacceptable for plans to move forward with PFP proposals without these safeguards in place. In addition to their advocacy role, the guidelines are essential reading for individual physician practices considering signing up for programs.

Absent proper standards, "performance" could be defined as just about anything a health plan says it is, measured by any criteria a health plan wants to apply. Delegates cited cases of plans whose only performance concern was of the cost-cutting kind.

Then there is the pay part of PFP. Payer talk usually focuses on an enhanced reimbursement carrot. (In reality, physicians might find the actual net pay bump underwhelming.) What gets much less play is the specter of the pay-cut stick, which further threatens viability -- and hence patient access -- for already hard-hit practices.

Beyond debate is that there are already many PFP programs in operation. Health care informatics firm Med-Vantage Inc. found 84 PFP programs covering 39 million beneficiaries in 2004. By early this year, the number of programs had jumped to 104. As this editorial goes to press, Senate legislation has just been introduced that would establish PFP in Medicare. The Centers for Medicare & Medicaid Services already is on record as being favorably disposed to such initiatives.

As momentum for PFP grows, expect more positive PR about it from payers in the months ahead. But as those public and private payers roll out the patter on PFP, they can expect to hear tough questioning from physicians who are now armed with the right questions to ask. It will be the sound of doctors who have been disappointed in the past and don't intend to let it happen again.