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The Transfiguration of Pay for Performance to Patient Centered Medical Home?

by jsidorov

The World Health Care Blog welcomes Jaan Sidorov as a regular contributor. Dr. Sidorov writes the Disease Management Care Blog, where this piece 1st appeared.

I recently had an interesting lunch conversation with the Chief Medical Officer (CMO) of a regional health plan. After investing more than a million dollars in per year in ‘pay for performance’ (P4P) over the last few years, progress has stalled. As a result, the focus in this organization has shifted from P4P to the Patient Centered Medical Home (PCMH). This health insurer, like many others, is planning to invest in a PCMH project in the coming months. The CMO I spoke with cited two reasons why the PCMH was in many respects displacing P4P: a) the emerging realization doctors ‘can’t do quality alone’ under 1st generation P4P only — even if considerable economic incentives are available — and b) the PCMH promises a reduction in claims expense for persons with chronic illness within 1-2 years.

One would think that P4P would have led to local investments in practice redesign required to achieve the outcomes (performance) necessary to achieve the added revenue (pay). In this CMO’s experience, that simply didn’t happen. Apparently, the physicians’ pay wasn’t used to buy EHRs, hire additional care managers, or invest in decision support. Instead, the docs simply ‘added’ quality activities whenever they could in the course of business as usual. Perhaps the added revenue was used to offset the declining primary care payments we’ve been reading about. Another interpretation is they kept the P4P money and ran.

Has P4P’s less-than-perfect track record added to the growing luster of the PCMH? While any association between P4P’s disappointment and PCMH’s acclaim may be spurious, I wonder if there is more to it. In fact, I’m struck by an underlying similarity between P4P and PCMH. Much like P4P, PCMH involves additional ‘pay,’ but the performance measures have changed from process and outcome measures to ’systemness’ measures: for example, it’s not LDLs but referrals, not A1cs, but registries, not medication management but self management and it’s not cancer screening but clinic teaming. For the average CMO, those underlying similarities and available money make the transition from P4P to PCMH intellectually and operationally easier.

There are some interesting messages here:

1) while advocates of PCMH may suggest that managed care organizations should consider redirecting resources away from disease management to the PCMH, one has to wonder if the monies being used are being redirected from P4P and,

2) once again, much of the hope for PCMH is riding on its ability to reduce health care costs. If PCMH is going to survive in this CMO’s health insurance plan, it better deliver and quickly.


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