The World Healthcare Congress included a number of discussions of the growing practice of “Pay-for-Performance (P4P).  Feelings about its propriety and effects on the healthcare system varied, judging by comments made by speakers and members of the audience.  One of the major issues raised was whether it makes sense for payers, or patients for that matter, to pay providers more for doing what they should already be doing anyway.

When it is reported that physicians adhere to best practice guidelines and evidence-based medicine only about half the time, should they be paid extra to correct their significant failures, or punished for not doing so?  Given the already burdensome and always growing costs of healthcare, does it make sense to pay providers more, since that would simply add to the costs?

Of course, there is one domain in which P4P should not be an issue – in proactive health management (PHM).  There is little basis for argument that providers are already being paid for PHM, or that it is something that they ought to be doing anyway.  Physicians, for example, have nowhere near the time required to assess their patients’ overall health and risks, much less coach them regularly on how to maintain or improve their health.  To spend even an average of one hour per year on a normal patient panel of 2000 patients would take up a primary physician’s entire work year, and yield almost no revenue under present insurance plans.

But physicians have already found a way to make PHM profitable – through patient-paid “retainer practices”.  Perhaps the best known, and certainly the largest retainer practice organization is MDVIP, of Boca Raton, Florida – where “VIP” stands for “Value in Prevention” as well as the usual interpretation.  A major focus of the roughly 150 physicians practicing in 16 states under the MDVIP banner is on prevention and patient health improvement, rather than just the special amenities, availability and access common in “concierge” practices.

It is necessary for any physicians who charge patients an annual amount in addition to getting paid based on Medicare or commercial insurance payment schedules to identify the specific extra services they offer, beyond those that are covered by health plans.  MDVIP, along with most other retainer practices, offer special health assessments and improvement partnerships, and easily justify their extra fees.

But PHM-focused practices yield significant value to both insurers and employers, even when they receive no payment from these payers.  For example, MDVIP has reported dramatically lower rates of hospital admissions for its patients compared to state averages in four states for which such averages are available.  Its admission rate varies from 62.7% lower in Arizona to 93.5% lower in Virginia.  Its rates for commercially insured patients are uniformly and significantly lower as well, across twice as many states, varying from 36.0% lower in Connecticut to 92.9% lower in Georgia, compared to what are rated the top performing health plans in each state. (www.mdvip.com)

MDVIP already serves employers directly through its Executive Health Plus program, which goes well beyond the traditional one-day-to-one-week-long annual physical to a year’s worth of health maintenance and improvement for executives.  Reductions in sickness absences and impaired performance at work, to say nothing of lower sickness care costs, can easily cover the full year’s retainer for most executives.  The University of Michigan’s Health Management Research Center, for example, found that executives who had even an annual physical had 20% lower sickness care costs and 45% fewer absence days than peers who did not. [N. Santelmann “How the Wealthy Get Healthy” Forbes.com July 21, 2004]

It would be a relatively simple matter for employers, in particular, to contract directly with providers, paying them for such performance as they are able to demonstrate in terms of reduced sickness costs, lower absences, improved performance, and similar value that goes beyond what traditional primary care focuses on.  Such payments would be for a different kind of performance, and one that traditional primary practices are neither paid for, nor usually capable of delivering.