|Intelligent Design Of P4P Programs Could Save Money
Program design is emerging as a key component in
determining whether adoption of physician P4P programs will positively
impact healthcare spending.
That’s the conclusion of RAND Health after the
think tank identified nine performance dimensions against which it
P4P design features that may affect spending include the
financial incentive structure and funding and the behaviors or actions
Design features are a double-edged sword. Some can increase spending and some can reduce spending, RAND found.
Those features more likely to reduce spending include:
- Rewards for activities that decrease use of expensive services;
- Rewards for system investments and better coordination of care delivery; and
- A system design that leads to reductions in morbidity and mortality risks.
Design features likely to increase spending include
rewards for increasing the use of necessary and appropriate services or
adding new money to pay for incentives.
The CMS Web site provides some data on the experience of
10 physician groups participating in the CMS Physician Group Practice
Demonstration. Four physician groups experienced favorable financial
performance under the demonstration’s performance payment
methodology that rewarded the groups through a gain-sharing arrangement
if they demonstrated reductions in spending.
The four successful physician groups –
Dartmouth-Hitchcock Clinic, The Everett Clinic, Marshfield Clinic and
the University of Michigan Faculty Group Practice — in 2008
earned a total of $13.8 million in performance payments as their share
of $17.4 million in Medicare savings for improving the quality and cost
efficiency of care. This compares to two physician groups that earned
$7.3 million in performance payments under the first year of the
demonstration in 2007.
RAND Health is a division of the RAND Corp. and is the nation’s largest independent health policy research program.
Address: RAND Health, 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138; (310) 393-0411, ext. 7775, www.rand.org/health.