Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
How Much Performance Does Pay-for-Performance Buy? Evidence From a Large Network of Primary Care Clinics
In response to the Institute of Medicine's report "Crossing the Quality Chasm", several provider organizations have begun to implement pay-for-performance (P4P) initiatives, which tie physician compensation to select measures of physician productivity. Despite the growing use of P4P payment schedules, existing empirical studies of their impact frequently suffer from a lack of an appropriate control group and the lack of explicit incentives at the physician level.
We exploit variation in the switch from salary to P4P compensation for physicians at a large outpatient health center to estimate the effect of a change in physician payment on physician productivity and patient health outcomes.
In 2004, the organization switched the majority of its physicians from a salary to a performance-based compensation schedule, which consisted of a substantially reduced base salary compared to its pre-P4P level and quality- and productivity-based components. Depending on specialty, physicians were paid between $22 and $66 for each outpatient encounter and an additional $5 for each of a number of different counseling and screening services administered. These counseling and screening services were selected to meet the goals set by the United States Task Force on Preventive Health Care. Counseling services included advice on the prevention of sexually transmitted diseases, unintended pregnancy, and periodontal disease, as well as advice on healthy eating, smoking cessation, and gun safety. Screening services included HIV antibody testing, Pap smears, and the detection of depression, substance abuse, and diabetic foot ulcers. In addition, select so-called "special procedures", which were considered very time-consuming and complex, were reimbursed at $15 and $30 each.
Preliminary results from claims data analysis suggest that between 2003 and 2005, physicians whose payment schedule was switched from a pure salary to P4P increased the number of monthly patient encounters than their colleagues who remained on a pure salary throughout the study period. The bulk of this relative increase in encounters was achieved by raising the number of patients seen rather than increasing the number of encounters per patient. Physicians in specialties who were paid most for encounters showed the largest increase in encounters relative to procedures. Within the P4P group of physicians, there was a dramatic relative increase in the reported use of quality procedures (counseling and screening services). Levels of low-density lipoprotein (LDL) and hemoglobin A1c (HbA1c) declined.