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(Not) paying for performance.

by JParkinson

There seems to be a lot of talk about paying for performance and payment reforms to incentivize intelligent care rather than the current model that rewards volume and intensity. Obviously the current model needs to change. Although healthcare quality seems like a noble cause, without the infrastructure to truly analyze an individual physician’s “quality,” the results are near meaningless. As a physician, I have been taught from day one to respect the randomized, double-blinded, controlled study and be skeptical of retrospective studies.

The current pay for performance strategies insist that the results from my practice as an individual physician are reliable results. However, it’s not a randomized, double-blinded study. I am supposedly the control seeing two thousand patients. It’s inherently flawed, but my salary will depend on it.

The Physician Quality Reporting Initiative is a voluntary program where physicians can choose to report certain quality measures determined by the Medicare National Bank. In the near future, failure to join will result in a reduction in payment. Participating in the Physician Quality Reporting Initiative is a waste of my time, money, and resources that should be devoted toward better patient care. Here is a quick summary from The Happy Hospitalist that will enlighten everyone about a failed, but possibly well-intentioned policy:

“Let me run you some numbers and show you why only 16% of doctors and other clinicians signed up for this voluntary program.  Let us imagine that a primary care doctor has a practice of 50% Medicare patients.  Let us say he generates revenue for the entire year of $400,000.  If half his revenue is Medicare,  $200,000 would be generated.  Assuming he does all the reporting correctly for all of 2007,  his bonus would be 1.5% of 200K,  or $3,000 for the entire year.  Let us assume a total tax burden of 33%. After tax take home for the year of effort for Dr PCP is $2,000.

$2,000 for the entire year.  Imagine for a moment if the primary care doctor saw 5,000 encounters for the entire year.  Let us imagine 50% of them were Medicare.  You have 2,500 Medicare encounters.  Let us assume that an office worker only spends 3 minutes on every single one of those 2,500 Medicare encounters filing the paperwork or electronically submitting every single one of those quality measures.  3 minutes.  I can’t imagine anything taking only 3 minutes.  But let us assume it does.  With 2,500 Medicare encounters, at 3 minutes a pop, you have yourself 7,500 minutes of unfunded paper work, to add to the mounds already present in the daily activity of the office.  That is the equivalent of 125 hours of work for a calendar year.  Imagine for a moment that this clerk is worth $10 an hour.  That works out to $1,250.  But you, as an employer must also pay 6.2% social security tax and 1.45% medicare tax.  So, tack on another $100.  As a physician, it would cost you $1,350 for a $10 an hour clerk to file every single PQRI quality measure for 2007.  In return, assuming you did everything right,  you would get an after tax net of $2,000 from the Medicare National Bank.

And of that $2,000, you, Dr Sucker, would net $650.  And that doesn’t include the 3 minutes of unfunded time the doctor spends on every single one of these patient encounters.”