Pay-for-Performance: Is Medicare a Good Candidate?

Thursday, December 14, 2006  | Cannon MF

Yale Journal of Health Policy, Law, and Ethics 2007 Winter;7(1):1-38

Introduction
According to one prominent study, adults in the United States receive the generally accepted standard of preventive, acute, and chronic care only about 55% of the time. The likelihood that patients will receive recommended care “varie[s] substantially according to the particular medical condition, ranging from 78.7 percent of recommended care . . . for senile cataract to 10.5 percent of recommended care . . . for alcohol dependence.” Evidence of low-quality care appears in Medicare, the federal health program for the elderly and disabled. Quality of care does not appear to be higher in areas where Medicare spending is higher. In fact, some studies point to the somewhat paradoxical conclusion that Medicare’s massive influence on the health care system has made it a major focus of efforts to solve the problems caused by quality-blind third-party purchasing.

A number of P4P initiatives are already under way in both the public and private sectors. Commercial insurers such as Aetna, PacifiCare, and WellPoint have been leaders in the field; Highmark Blue Cross Blue Shield has experimented with P4P since 1994. Those private-sector programs reward physicians and facilities for meeting performance goals, including patient satisfaction, preventive care, chronic care, acute care, and smoking cessation. edicare currently has ten demonstration programs underway that tie higher reimbursements to data reporting and a variety of quality indices (including structural, process, and outcome measures) across various types of care (though typically for chronic illnesses) and care settings.

A full report is available here.