Experience from a Physician Pay for Performance Experiment in Outpatient Settings in Northern California

Objectives:

Despite the growing popularity of Pay-for-Performance (P4P) in health care settings, little is known about how different methods of payment impact physician's responsiveness to incentives. We examine physician performance with regard to various quality measures with the adoption of a physician-level incentive program with different methods of incentive payment.

Study Setting:

The Palo Alto Medical Foundation (PAMF) is a non-profit health care organization that contracted with three multi-specialty physician groups in Northern California. In January 2007 PAMF implemented an experimental physician-specific P4P incentive program where the amount of the incentives was linked to the Palo Alto Medical Group(PAMG) physician's performance.

P4P methods:

Primary care physicians (n=168) were randomized to two groups differing only by the frequency of incentive payment, either four quarterly bonuses (max. $1250/quarter) or a single end-of-year bonus (max. $5000/year). Performance scores were reported to both groups and the prorated bonus was delivered only to the quarterly group for the first three quarters. PAMF stakeholders participated in the process of determining which performance measures to use and what levels of performance to incentivize. Quality measures consisted of 15 dimensions, including clinical measures and screening procedures.

Principal Findings:

As of January, 2008, the first three quarters of data were available for preliminary analyses. The average scores for the 15 measures ranged from 22%(blood pressure check for 3 year olds) to 92%(long-term controller prescription for patients with asthma), with an average 52%. Generally, there was a steady increase in scores over the three quarters for the most of the measures. A significant improvement(p<.05) was observed in three clinical outcome measures (HgBA1C level, blood pressure, and LDL control among diabetic patients) and one procedure measure (colon cancer screening). However, there was no difference in the scores or in the change in scores between quarterly and annually paid groups.

Conclusions:

Physician-specific P4P incentives, developed with the input from participating physicians, can improve indicators of ambulatory care quality, at least for the dimensions tied to the incentives. Given the relatively short time period and small bonus, the improvement in performance led by the physician-specific incentive was considerable. However, the frequency of payment itself, with no difference in the overall amount of being paid nor in the frequency of reminder or reporting of performance score, may not make an appreciable difference in physicians' response to the program.