Best two paragraphs on pay for performance I’ve read in a long time

Ashish Jha says something familiar (at least to health policy wonks), but in a new and, to my eye, very effective way. Does pay for performance work? His answers,

In really simple terms, pay-for-performance, or P4P, can be thought about in two buckets:  the “pay” part (how much money is at stake) and the “performance” part (what are we paying for?).  So, in this light, the proponents of P4P are right:  you get what you pay for.  The U.S. healthcare system has had a grand experiment with P4P:  we currently pay based on volume of care and guess what?  We get a lot of volume. Or, thinking about those two buckets, the current fee-for-service structure puts essentially 100% of the payments at risk (pay) and the performance part is simple:  how much stuff can you do?  When you put 100% of payments at risk and the performance measure is “stuff”, we end up with a healthcare system that does a tremendous amount of stuff to patients, whether they need it or not.

So, this (stupid) version of P4P we’ve been running works very well! He continues,

Against these incentives, new P4P programs have come in to alter the landscape.  They suggest putting as much as 1% (though functionally much less than that) on a series of process measures.  So, in this new world, 99%+ of the incentives are to do “stuff” to patients and a little less than 1% of the incentives are focused on adherence to “evidence-based care” (though the measures are often not very evidence-based, but let’s not get caught up in trivial details).  There are other efforts that are even weaker.  None of them seem to be working and the critics of P4P have seized on their failure, calling the entire approach of tying incentives to performance misguided.

Now it is obvious why this version of P4P won’t work as desired. It’s 99% the stupid way. No, it’s not a new insight, but it’s phrased very well. Read the rest.


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