Pay for Performance Essay

“Pay for performance has become a central strategy in the drive to improve health care” (Joynt, Jha, Orav, & Epstein, 2012, p. 1606). There are many aspects of pay-for-performance. These aspects include; effects of reimbursement by this approach, the impact cost reductions has on quality and efficiency of health care, the affects to the providers and patients, the effect on the future of health care.

Currently an estimate of half of all Medicaid programs operated with a form of the pay-for- performance approach, and of the programs not operating such approaches 85% have intentions of doing so in the next five years (Briesacher, Field, Baril, & Gurwitz, 2009). Pay-for-performance is inevitable with The Affordable Care Act (Werner, Kolstad, Stuart, & Polsky, 2011). The pay- for- performance approach is useful in promoting hospital care improvements (Lindenauer, Remus, Roman, Rothberg, et al, 2007).

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Pay- for- performance is an approach constructed to reward providers through reimbursements (Briesacher, Field, Baril, & Gurwitz, 2009). These reimbursements being given when high levels of performance or improvements of performance are attained (Briesacher, Field, Baril, & Gurwitz, 2009). “Pay for performance means a variable pay approach that is anchored to a measurement of performance…” (Wiscombe, 2001, p. 28). “Pay-for-performance reimbursement has become a popular and growing form of health care payment built on the belief that payment incentives strongly affect medical providers’ behavior (Mayes & Walradt, 2011, p. 9). The goal is by paying high performers higher reimbursements they will provide better care with an increase in quality (Mayes & Walradt, 2011).

Another goal is cost reduction (Mayes & Walradt, 2011). Pay-for-performance necessitates more emphasis on training or the approach will not succeed (Wiscombe, 2001). This approach makes for a competitive aspect amongst health care providers also (Wiscombe, 2001). Reimbursements are greatly affected by the pay-for-performance approach. Most P4P approaches adjust payments to hospitals, individual physicians, networks of physicians or medical practice groups” (Mayes & Walradt, 2011, p. 39). Ways that reimbursements are given are; bonuses based on percentage of care delivered, bonus payments per patient with high quality of care, and a percentage of the total cost savings achieved in relation to what cost would have been without high quality of care (Mayes & Walradt, 2011).

Tying financial incentives to care provided is an approach improving the quality of care (Joynt, Jha, Orav, & Epstein, 2012). The policy of tying financial incentives to the quality of performance has strong face validity that is, paying for better care should promote improvements in quality and, ideally, lead to better patient outcomes” (Joynt, Jha, Orav, & Epstein, 2012, p. 1606). One study found that greater than half of pay-for-performance hospitals attained higher performance scores and greater patient quality (Werner, Kolstad, Stuart, & Polsky, 2011). These findings suggest that this approach may have the greatest effect on quality of health care (Werner, Kolstad, Stuart, & Polsky, 2011).

This approach is lowering costs over the long haul by increasing prevention, primary care, and earlier treatment (Mayes & Walradt, 2011). Looking at the aspect of the providers such as the nurses, pay-for-performance compensation systems have two types of payments; guaranteed basic pay and incentive pay (Thompson, 2005). Basic pay is being given to everyone; however incentive pay is extra money given to those who perform at higher levels (Thompson, 2005). An example of demonstrating this in hospitals is by use of clinical ladders for nursing staff.

This affects nurses because they have potential to earn greater amounts of money. This affects the patients because they have higher educated and more knowledgeable nursing staff caring for them. In reference to providers pay-for-performance is demonstrated by possibly paying the physician in a certain clinic based on the number of patients seen each day (Thompson, 2005). This has resulted in some physicians avoiding certain patients who will likely lower quality (Mayes & Walradt, 2011). This is not a good thing for patients with comorbidities. Fee-for-service reimbursement has traditionally disadvantaged primary care by overpaying for procedures and intensity of care, while underpaying for evaluation and management services that require physicians to spend time diagnosing and coordinating patients’ care” (Mayes & Walradt, 2011, p. 40). This has led to many frustrations amongst health care providers because they have to put forth effort and make up for the low reimbursements by seeing more and more patients (Mayes & Walradt, 2011).

The future of pay-for-performance is vague and unknown. With The Affordable Care Act of 2010 establishing pay-for-performance programs for hospitals change is inevitable (Werner, Kolstad, Stuart, & Polsky, 2011). “This program will include all US acute care hospitals” (Werner, Kolstad, Stuart, & Polsky, 2011, p. 691). Payment will be based on a Medicare type and performances will be based on Medicare and non-Medicare patients (Werner, Kolstad, Stuart, & Polsky, 2011). This act is set to take affect within the next year.

It seems that this program would benefit quality of care; recent models have proved to be ineffective (Werner, Kolstad, Stuart, & Polsky, 2011). There are numerous questions and unknowns on the designing and implementation of this approach to increase their effectiveness (Werner, Kolstad, Stuart, & Polsky, 2011). The problem is there is just not enough research. Who knows what the future will bring, but it surely cannot get much worse than the United States’ current health care system. Briesacher, B. A. , Field, T. S. , Baril, J. & Gurwitz, J. H. (2009). Pay- for- performance in nursing homes. Health care financing review, 30(3), 1-13. Joynt, K. E. , Jha, A. K. , Orav, E. J. , & Epstein, A. M. (2012). The long-term effect of premier pay for performance on patient outcomes.

The New England Journal of Medicine, 366(17), 1606-1615. Lindenauer, P. K. , Remus, D. , Roman, S. , Rothberg, M. B. , & al, e. (2007). Public reporting and pay for performance in hospital quality improvement. The New England Journal of Medicine, 365(5), 486-496. Mayes, R. , & Walradt, J. 2011). Pay-for-performance reimbursement in health care: chasing cost control and increased quality through “new and improved” payment incentives. Health Law Review, 19(2), 39-43. Thompson, R. E. (2005). Is pay for performance ethical? Physician Executive, 31(6), 60-62. Werner, R. M. , Kolstad, J. T. , Stuart, E. A. , & Polsky, D. (2011). The effect of pay-for-performance in hospitals: lessons for quality improvement. Health Affairs, 30(4), 690-698. Wiscombe, J. (2001). Can pay for performance really work? Workforce, 80(8), 28-34.