Paying Doctors For Outcomes Makes Sense in Theory. So Why Doesn’t it Work in the Real World?

For decades, the costs of health care in America have escalated without comparable improvements in quality. This is the central paradox of the American system, in which costs outstrip those everywhere else in the developed world, even though health outcomes are rarely better, and often worse.

In an effort to introduce more powerful incentives for improving care, recent federal and private policies have turned to a “pay-for-performance” model: Physicians get bonuses for meeting certain “quality of care standards.” These can range from demonstrating that they have done procedures that ought to be part of a thorough physical (taking blood pressure) to producing a positive health outcome (a performance target like lower cholesterol, for instance).

Economists argue that such financial incentives motivate physicians to improve their performance and increase their incomes. In theory, that should improve patient outcomes. But in practice, pay-for-performance simply doesn’t work. Even worse, the best evidence reveals that giving doctors extra cash to do what they are trained to do can backfire in ways that harm patients’ health.

The stakes are high. Britain, with a much different health system — single payer — has embraced pay-for-performance in a big way, spending well over $12 billion on such programs in 12 years. And pay for performance is a feature of virtually every major health program in the US.

While cost estimates are scarce, regulations intended to incentivize doctors for quality and efficiency cost physicians more than $15 billion just for documenting their actions. In yet another assault on common sense, Congress passed an enhanced pay-for-performance law (“MACRA”) that went live January 1.

Blame for the wasteful embrace of pay-for-performance measures can be directed to at least two sources: First, an overreliance on economic theory in the absence of empirical testing. (Of course, performance will get better if you pay people for outcomes, an Econ 101 student might say.) Second, numerous studies have purported to show that health outcomes improve when doctors’ pay is pegged to performance outcome — yet these studies have fatal flaws.

Many such studies suffer from what’s known as “history bias.” That is, they tend to treat any positive health trend after the introduction of performance pay as the result of that payment system. But it’s often the case that the positive trend predates the introduction of the treatment.

The failure of pay for performance has been demonstrated repeatedly in scientific studies. In a recent article in the CDC’s Preventing Chronic Disease, we showed that much of the early research on the supposed success of pay for performance was conducted with serious research design flaws. For example, in the UK, effective treatment of high blood pressure has been increasing for years — well before pay-for-performance measures designed to improve blood-pressure treatment had begun. Doctors had both been getting better at identifying patients with high blood pressure and drug treatment regimens had been improving. But the early research inappropriately credited pay for performance with all the improvements that followed its introduction.

Consider the following graph, from a major study evaluating the United Kingdom’s pay-for-performance policy where diabetes is concerned. It purported to find a major positive effect. The red dashed line shows where the rewards program began:

Figure 1. Mean clinical quality scores for diabetes treatment at 42 practices participating in a study evaluating pay-for-performance in the UK. The scale for scores ranges from 0 percent (no quality indicator was met) to 100 percent (all quality indicators were met for all patients). Campbell SM, Reeves D, Kontopantelis E, Sibbald B, Roland M. Effects of pay for performance on the quality of primary care in England. N Engl J Med 2009;361(4):368–78.

The key problem here is that the researchers use only two data points during the long period before the program was implemented, and two data points afterward. If anything, it appears that the improvements — to the extent any are detectable by examining only two data points — may have grown less quickly after implementation of pay-for-performance. We also don’t know if any small improvements resulted from pay-for-performance or from some other changes in physicians’ practice.

The next figure illustrates a result of one of the most convincingly negative studies of the UK’s pay-for-performance policy. In this case, the treatment question involved patients with hypertension. Using a strong long-term research design and seven years of monthly data for 400,000 patients before and after the program’s implementation (84 time points), the study showed that the pay-for-performance program was introduced in the middle of a slight rise in the percentage of patients who began blood pressure treatment.

It seems clear from the trend line that pay for performance did not cause the rise:

Figure 2. Percentage of study patients who began antihypertensive drug treatment from January 2001 through July 2006. The dashed line indicates when the UK’s pay-for-performance policy was implemented (April 2004). Serumaga, Ross-Degnan, Avery, Elliott, Majumdar, Zhang, et al. Effect of pay for performance on the management and outcomes of hypertension in the United Kingdom. BMJ 2011.

This is a big deal: a $12 billion program that links doctors’ incomes to measures of health-care quality had no effect.

The strongest design for evaluating policies is a randomized controlled trial (RCT). In such study designs, random allocation of participants into intervention and control groups increases the likelihood that the only difference between the groups is the pay-for-performance intervention. In a recent RCT, physicians in the pay-for-performance condition were eligible to receive up to $1,024 whenever a patient met target cholesterol levels. Physicians in the control groups received no economic incentives to hit those targets.

There was no real difference in improvements between the two groups:

No study is perfect, and it’s unlikely that a single study can determine the truth. But when you single out the most rigorous systematic reviews, empirical support for pay for performance evaporates.

Why doesn’t pay for performance work?

There are a few reasons why performance incentives fail. They reward doctors for things they already do, like prescribing antihypertensive drugs. What’s more, the programs often use lousy, unreliable quality measures: For example, they might penalize doctors for not prescribing antibiotics to patients who are allergic to them.

More troubling, there is evidence that such policies may even harm patients by encouraging unethical practice. One international systematic review found — in addition to no positive effects — that pay-for-performance programs had the unintended consequence of discouraging doctors from treating the sickest and most costly patients; there’s an incentive to cherry-pick the healthiest, active, and wealthy patients.

Health professionals do not respond to economic carrots and sticks like rats in mazes. As the leading health care economist Uwe Reinhardt said, “The idea that everyone’s professionalism and everyone’s good will has to be bought with tips is bizarre.”

Some health policy experts, like Harvard public health professor Ashish Jha, have argued that the awards in pay-for-performance programs simply ought to be increased: “Make the incentives big enough, and you’ll see change,” he has said. But there’s no evidence that the program has failed because doctors aren’t being paid enough. A pay-for-performance program in the UK paid an extra $40,000 per year on average to family doctors, but it still failed to improve care.

The pattern goes deeper than flawed study design and quality measures. Policymakers too often show unbridled confidence in economic theories and models that are unsupported by evidence. Health economists aim to predict how doctors will respond to incentives, but without understanding the complex pressures they face that shape behavior — including high patient loads, incomprehensible insurance rules, increasing time demands for more and more regulatory requirements, duplicative or conflicting regulations, and documentation of often unnecessary clinical data in different and noncommunicating electronic medical records systems.

In April 2015, ignorant of decades of research, a bipartisan Congress passed a huge new law (“MACRA”) that will tie even more funding to these questionable “quality scores” beginning this month — even amid the tumult of the Obamacare debate. The government’s MACRA rules took up almost 2,400 pages of text, and physicians are already balking at the additional paperwork and screen time.

Under MACRA, doctors who opt into pay for performance are allowed to themselves choose, out of many possibilities, the six criteria on which their performance will be judged by the Centers for Medicare and Medicaid Services (CMS). Letting doctors choose their own criteria clearly lets doctors game the system for extra income, and it seems unlikely to provide any useful data — especially with almost every doctor choosing a different mix of standards.

We can do better. Researchers, policymakers, and journalists have a responsibility to understand the crucial role of robust research design. Academic journals should adopt the same research design standards used by Cochrane, the leading international medical research organization that conducts reviews of medical evidence. Cochrane weeds out the weakest studies.

Instead of a punitive incentive-and-penalty approach, policymakers should try to identify the reasons for poor performance. In contrast to numbers that can be gamed, doctors and nurses want concrete information they can use to improve care and save money. One of the most celebrated successes in American medicine involved the use of doctors, nurses, and pharmacists to counsel frail elderly people being discharged from hospitals and follow them at home to help them take their drugs and stay healthy. This program avoided costly and painful readmissions to the hospital.

We also must rethink the role of abstract economic theory and dubious economic models in policymaking. While much of human activity can be attributed to simple financial incentives, not all can nor should be. This is not just an academic argument. America spends more on medical care than any other nation but gets second-rate results. We need better research and more realistic theory to guide our massive investments in health care.

Stephen Soumerai is professor of population medicine and research methods at Harvard Medical School and the Harvard Pilgrim Health Care Institute. Ross Koppel teaches research methods and statistics in the sociology department at the University of Pennsylvania, conducts research on health care IT, and is a senior fellow at the Wharton School’s Leonard Davis Institute of Health Economics.

This post first appeared in Vox.

Categories: Uncategorized

18 replies »

  1. Jim, I think we are worse off today then we were before Obamacare. In fact from the beginning I believe we were worse off after almost every government intervention starting with the favorable tax treatment provided to employers instead of individuals.

    That goes along with Uwe’s statement, “But perhaps it was worth a try to see if it could work.” Trying things or theories in medicine involves taking small steps and recognizing when the theory isn’t backed up by the studies. I don’t think anyone would want a doctor thinking a pure theory was worth a try and suddenly advocating a major change in care killing thousands of patients, yet we let our leaders fiddle around making huge changes with these very important things even when the evidence is against what the government wishes to do.

    Common sense and logic Trump ideology and politics..

  2. Another reason it doesn’t work? Patients. The doctor can do everything right but if the patient goes home and eats crap and doesn’t take their meds they have a bad outcome. Those are the patients that get fired from the practice. We avoid that by not taking any 3rd party payment — they pay us when they leave and if they have insurance can file on their own.

  3. I applaud the authors for bringing attention to the “history bias,” which is one of the most common means of self-deception (or trickery?) to justify policy interventions.

    I am puzzled by their recommendation to apply a corrective on the basis of “robust research design.” Who will ultimately judge the value and trustworthiness of empirical studies to guide policy? And by the time such research is conducted and analyzed, the health care environment is inevitably changed, making the study essentially moot.

    Rather, it is most important for economists and policy analysts to better reflect on the effect of triangulating the medical transaction. Can third parties (insurers, policy makers, employers) determine value in the same way that patients would determine value, absent the third party?


  4. I will not speak for Margalit, but I agree wholeheartedly with her. My thoughts on “the situation” are that the physician-patient relationship has been eroded by all sorts of computers, data entry personnel, billers, coders, recovery audit experts, CEO’s, CMO’s, CFO’s… well you get the idea.

    Physicians who stay in medicine are an unusual sort. We are type A’s to the max, people pleasers, and generally give our best through blood, sweat, and tears. Incentivizing stuff we already do results in “zero”. We change how we code instead because that is what the “data collectors are looking for.”

    We spent years in school, missed our 20’s entirely; we come out of school >200K in debt, hoping we finally get our chance; the opportunity to help people and change their lives for the better. Look at what we get instead? “The situation”. Who is going to sign up in the future for this “opportunity”? No one… so what happens when there are no doctors when you need one?

    Basically, the CEO’s will keep taking their 1 million plus, they will incentivize the clinically incorrect things, the physicians will continue getting their 100K, and pretty soon, CEO’s will be treating your illness wrong. End of story.

  5. “I do think patients need a penalty for not exercising, or following diet restrictions,,,”

    They pay a very big penalty, their health. You might want to consider this anecdote. Years ago many people actually paid cash when they saw their doctor. I noticed that many of my uninsured diabetics were more likely to follow the regiment offered because it was less expensive. We would work things around so that the number of office visits could be reduced because they had better control over their blood sugars.. The insured one’s didn’t seem to worry as much.

  6. While the US Marine example is about pride and professional reputation, it is much more about team dynamics, loyalty, and leadership. Too many of today’s professionals have not had the “privilege” of serving in the military, so the reasons why military participants act the way they do may be a bit opaque to them. What that has to do with economics is beyond me. In any event, to me, what is more important in this thread is the following:

    Our medical system has failed us on too many levels
    As a consequence we understandably tried to move to models that tried to change the care and reimbursement modalities (EHRs, P4P, ACO, bundled payments)
    The physician community has resisted all of the foregoing pretty vigorously despite the fact that they hate the existing system
    There seems to be consensus that said EHRs and payment modalities are inane and hinder rather than facilitate care and physician mental health
    It appears that the wrong people have been designing said EHRs and payment modality changes–we should have had practicing physicians. Why we haven’t had practicing physicians involved (perhaps they don’t have the time?) is not known to me.
    Sooo…does that mean we go back to the bad old days? Or do we keep up the cause to change to a better model? I think the correct answer is obvious.

  7. I do agree, with what you say. When a doctor says a patient needs a lifestyle change,,, the patient ignores it,,far too often! (I must admit I have been on a restricted diet since 16 and am 39 now,, it took me years of annoying and angering my own doctors,, to finely get to a point where I could adapt) I do think patients need a penalty for not exercising, or following diet restrictions,,, I worked for a company who yearly took BMI, and blood sugar, and many other analytics and they pro-rated our insurance on that,,,giving a “”preferred/cheaper” rate base on if you were in the range,,and if not, they wrote a regimented program,,and you had to check in so often,,but then could dtill qualify (some people felt this invasive and a form of bigotry),, I also heard that on a few occasions they found people diabetic and helped them,,,got them into see a doctor,,this may have saved lives.. (I am against pay for performance insurance also because those most sickly can least afford help) But Why not make physicals mandatory in a single payer health plan? (and tied to public services? such as drivers license? or when people are sick and food preparation industries or,, we now live in a time when analytics and large databases can find trends, and spot anomalies.

  8. “However, there has been the mounting evidence—even in multiple meta-analyses—that P4P programs were having little effect across a range of clinical services, from quality of ambulatory care to rates of breast cancer screening. Despite this, Congress created multiple P4P programs within the ACA to incentivize better care.”

    An important issue is why Congress has passed programs that the studies indicate don’t work while not changing the incentives? Do you have an answer?

  9. Great, important discussion.

    Though there are some disagreements here, let me just emphasize a key point that everyone agrees on, that is indeed at a crisis point, that is in fact by all reports degrading the real productivity of physicians at a point when we need their productivity more than ever.

    That key point is the sheer complexity of these measures. Economics 101 believes in incentives. Advanced systems behavioral economics examines how and whether that incentive actually works. Any incentive is a communication: Do this, you get that. If you make this sale you get 10% of the sale amount, and you get it in this month’s paycheck.

    If you want to use incentives to promote any kind of behavior change,
    o the behavior change has to be clearly, provably attached to an outcome that you want (more sales of a profitable upsell product, for instance, not just more sales of a loss leader)
    o the incentive has to be large enough for the recipient to really care about
    o the incentive has to be large enough to be significantly greater than any costs incurred to receive it
    o the relationship to the behavior change has to be simple and clear
    o the reward or punishment must be clearly attached to what triggered it
    o it should be as instantaneous as possible.

    None of these is true of these physician incentives. Even before any kind of testing, there is no reason to expect that any of them would work to change physician behavior. Why would they?

    In the medical context, there is the added burden that the physician has to believe that what you are trying to get him or her to do is a good, necessary thing to do. If they believe that, they are probably already doing it.

    The only way financial incentives can work in healthcare are incentives not to _push_ doctors to do something they are not doing, but to _allow_ them to take the time to do things they can’t otherwise afford to do, with the minimum of fuss and interference. BCBSMA’s Alternative Quality Contracts (as Michael mentions) are a great example: They don’t tell the primary care physicians anything about how to do medicine. They reward them very substantially for lowering the amount of acute and emergency care needed by their patients, because the PCPs have kept close touch with them.

  10. Over six years ago in a similar conversation an anonymous physician wrote; ““We are doing the best we can, given the situation we find ourselves in. If you incentivize us, we will still do the best we can given the situation we find ourselves in. Output change: virtually zero.”

    The “situation” is what must be changed, but lots of rich people (corporations are people) would be losing lots of cash if that change ever occurred, so we keep treading water….

  11. Fundamental to economic theory is the utterly predictable behavior of homo oeconomicus or femina oeconomica who maximizes his or her happiness, which in turn is positively correlated with monetary wealth, ceteris paribus. This homo oeconomicus or femina oeconomica is therefore styled as a human Pavlovian puppie whose head can be turned and mouth can be made to water just by dangling sausages before their eyes.

    The model probably does fit quite a few human beings, especially those in financial markets, but also elsewhere.

    Yet is seems to fit more poorly certain types of professions – e.g., the US Marine who risks his neck for pennies, or certain professionals, or perhaps many professional managers of corporations. There is such a thing as professional pride and reputation.

    Economists cannot take pride in the hash they have made of the compensation of corporate executives who have shamelessly gamed the incentive-driven compensation economists 9was it Weizman at MIT?) for them. There is, by now, a burgeoning literature on it – see, for example, Lucien Bebchuck’s and Jesse Fried’s book “Pay without Performance.”

    The same seems to be happening in our attempts at P4P in health care, especially under the stingy rewards we offer for performance which is, in any event, hard to measure to the satisfaction of physicians.

    But perhaps it was worth a try to see if it could work.

  12. This is fascinating!, best article I have read in quite awhile. though I completely disagree! When I have a car motor rebuilt,,and the car dies in 30 miles from the mechanic shop,,,I stop payment to the mechanic lest its repaired,,, when my father passed away less then 16 hours after release from the hospital,,, that hospital still expected to be paid?,,,, when my mother had a lung puncture done which later within days,,was determined not to have been needed, that in fact damaged her so badly ,,compounded with her other health issues she now needs a heart lung transplant,,,, we never sued,,,but I felt taken advantage of and victimized…. sure we had enough insurance to pay most of that,, then my step dad passed and the hospital went after my mother for 100k,,,, if their care and treatment had worked,,he would have been alive,,,,but fail… I was premed once upon a time, and I understand its care,,,but I was also a military contractor,,and was called a war profitteer,,,well what I see is health care profiteering!! now please understand I think nurses are being abused,,,we locally have stopped hiring lpn’s and the few we have are used behind counters,,,and our Sanford Health,,they even have cash drawers!,,, they only hire RN’s in care positions it seems… Altru also seems in a similar boat in my area (but much better care) I do think to save money single payer socialized is better, and in NW MN,,we see this from both sides (canadians often here for our casino’s,, and one day a few of us sat around, and what would you do if you got cancer?,,,we all said we had insurance till it ran out,,,(my own grandfather on mom’s side,,,lost 3 million in his fight with cancer,,,which killed him lympho leukemia). but this canadian turns around,,wow,,I go home and my people take care of me… Health care needs to be simple! and Yes I agree insurance rules are over complicated,,(they make money by saying no to people, and yes as little as possible to a point they train their people to default to NO…) and so long as ANY,,health insurance company exists in this,,”system” ,,,there will be a conspiracy to outright provide poor to no,,care.. (Doctors used to be well off but not so well off their grandkids need never work,,, also the pay system does need to be restructured their are some who abuse the system,,and some health “systems” ,,businesses who try to make medicine into mcdonalds,,,,, My heart goes out to the GP’s in rural or urban communities,, we need to cut the debt they all incur for education,,driven by massive student loans we are hurting our health care providers!,,, of course that means they need to pay bills!,, We have so many smart people but simply put,,america needs to buy in bulk,,,education and healthcare!,, this may hurt the top tier 3 percent but america needs triage!,,isn;t saving and helping people what its all about? (student loans the size of 3 mortgages,,,insane!) Also some education changes pre-college,,, more health programs! every american should know cpr,,,heck lets get som pharaceutical education,,,some more physiology,,, our bodies if better cared for,,need less maint,,,what happened to preventive care? (and lets outlaw cigarrettes,,,and strengthen food safety and water standards!)

  13. this ignores the elephant in the room- American patients are fat, lazy, and stubborn know it alls.
    I toured Europe for 3 weeks in grad school for a neuro conference, I saw 0 overweight europeans. The roads are too small to drive everywhere, so they walk. They eat high calorie food but very small portions, meat is expensive, buffets were non existent. The only obese people I saw were all American tourists.

    Paying physicians, who are already overworked, underpaid, and burned out, based on patient behavior is idiotic, unless you can punish the patient.
    1. Physicians are overworked/underpaid- EMR/EHR cut primary care productivity 20-30% is what everyone tells me. My wife’s partner used to see 34 patients daily, now he can only fit 24. My wife spends 7 hours on patient contact while charting, then 3-4 hours EVERY night charting after the kids go to bed- fix it!
    2. My brother in law, with a 2 year phys assistant degree, just got offered a job in a similar state/demographic that pays more than my wifes family practice position with her 7 years of post baccalaureate education.
    3. reports abound of depression and suicide rates rising frighteningly in physicians. We had 3 physician suicides last year locally, I had never heard of one locally in the 10 previous years.

    The system is broken b/c americans want pills, and will actually turn you in for suggesting they lower their BMI(and ratings affect your salary at our hospital) So what happens is docotrs “fire” patients for non compliance.
    doctors are brilliant people who will only put up with so much before you screw with their families(income, time, level of frustration etc). Then they just start playing patient ping pong with other physicians.

    between destroying physician productivity, the rise in autonomy of mid levels (dumbing down of medicine) as an answer to that rise, the additional stress, the war this has created between mid levels(who were intended to support physicians and alleviate their overloaded work schedules) and medical doctors/DOs the recent changes in the healthcare field have destroyed this great institution.

    Doctors are among the most brilliant americans, dont micromanage them!

  14. Well, yes and no.

    I couldn’t agree more about the dangers of simple financial incentives, and I am particularly concerned about the love affair with an oversimplified “consumerism.” I recently wrote in defense of the word “patient” in the BMJ. (The blog version had the better title, “Girls, Queers and Patients”) http://blogs.bmj.com/bmj/2016/08/18/michael-m-millenson-girls-queers-and-patients/ and I’ve written in the Journal of General Internal Medicine about the way in which three aspects of patient-centeredness — the clinical, economic and ethical — can be synergistic but also conflict.

    Indeed, back in the 1990s, I satirized the George W. Bush administration’s push towards consumerism by imagining a discount colonoscopy advertised online, but anesthesia was extra and the doctor included for that price was a recently retired surgeon. Today, that might be Dr. Tom Price’s dream scenario.

    Having said all that, I laughed out loud at the authors’ indignation about “paying doctors for what they do, anyway” and have zero sympathy for those who believe that professionalism alone is enough to change behavior. It’s not and it never was, as everyone from the American College of Surgeons to the AMA has found.

    The authors of the above blog are smart and accomplished academics, so I suggest some thorough research on the history of pay schemes.. I write about the history in this Health Affairs blog (http://healthaffairs.org/blog/2015/09/10/medicare-fair-pay-and-the-ama-the-forgotten-history/). Read “The Social Transformation of American Medicine” or Marc Rodwin’s “Money, Medicine and Morals.” ALL payment systems have drawbacks.

    (Quick poll, only for pediatricians and family practitioners: “When some of your medical colleagues chose to become specialists, do you think money was ever a factor? Do you think it’s a factor today?”

    So what do we do? Having spent a great deal of time lately in the front lines of medicine doing research, and having seen doctor burnout in some areas, I think the response is not more “consumerism” nor is it to get rid of guidelines. (Rationalize them, yes.) If you read my book, “Demanding Medical Excellence,” you would see just how little attention doctors paid to the evidence (even though, to be fair, they thought they did) until incentives and tools both changed much of that.

    We need to change incentives completely, as we did with hospitals and DRGs, not more experiments. Let groups of physicians work on the details, but make the change inexorable, the way BCBSMA did with its alternative quality contract. Granular, but not too granular.

    Citing chapter and verse, I’ve documented how many patients have been hurt and died because of the profession’s obsession with its own autonomy. Physician heroes — and the latest include folks like Ashish — have to continue to fight to balance appropriate autonomy with appropriate accountability. You know, like respecting our military while realizing that accountability saves lives.

    To summarize, we need to encourage professionalism, which is vital, by realizing that doctors, as one third-generation physician put it, are just like everyone else. Resist economism and resist false nostalgia and sentimentality.

  15. I very much thank Ashish for his comment. He’s right: I had not appreciated enough the distinction of differences between MDs and hospitals. (Note: Steve may have examined this in detail…. I’m speaking about my own shortcomings here.) Hospitals exist sui generis–they are systems, not people/individuals. It follows, therefore, that the carrots and sticks to motivate improvements might well be different from those for individuals. Alas, as Ashish points out, neither incentive program (for docs or for hospitals) seem to be very efficacious. The measures are often ill-considered, there are so many multi-co-linear factors that the mind boggles, and the idea that economics 101 theory can be applied to everyone, every thing, and every purpose is absurd. (See Prof. Reinhardt’s comments…to be posted, I hope soon.)

    [Digression: Many, many years ago, I studied a hospital that had a much higher sense of staff cohesion than any of those around it. I discovered the secret sauces was a nasty administrator/religious leader whom everyone hated so much they worked well together. But clearly that’s a disastrous recipe for better healthcare…. and I have no idea if outcomes were better. I’ll speculate that the outcomes were terrible. Toxic leadership is….err….toxic.]

    Returning to the point: So I agree that we have (or should have?) two incentive programs; not one. And, sigh, both appear to be inadequate, poorly designed, and based on an overly simplistic understanding of the nature of (some) human nature and/or the nature of organizations. I also agree we are obliged to act….to find better systems. It’s not enough to point out the failures.

    I have some Ideas, and Steve and I — both of us devoted to using good research methods — have called for serious research to investigate this, I encourage others to comment and provide insights.

  16. This is an interesting piece and summarizes some of the literature on pay for performance. I am sympathetic to the Steve and Ross’s conclusions and even honored that they would mention me. I just wished they would stop so obviously taking my comments out of context.

    If you want a quick summary of the literature, here’s what we know about pay for performance (P4P):

    1. It tends to reward those who were already doing well.
    2. It tends to have very small beneficial effects on processes of care.
    3. It has no real impact on patient outcomes.
    4. There is mixed evidence on whether it makes disparities better or worse.

    Now here’s a key point: there is a difference between P4P for doctors versus hospitals. And this distinction is important.

    1. Doctors (and nurses) have professionalism and internal motivation driving them to improve care. I generally think that P4P targeted directly at doctors/nurses is unwise and probably will do more harm than good (behavioral econ would suggest that it would dampen internal motivation).

    2. Hospitals and other institutions are not people. Hospitals don’t have internal motivation and professionalism (yes, the doctors who work in them do). The P4P programs that have targeted hospitals are generally a mess — tiny incentives, a hodgepodge of measures, very complex design that no one can sort out.

    What I have argued is that if you want to improve hospital care, you may want to think about fixing P4P: increase the size of the incentives and simplify metrics to focus on a small number of high value ones. I’ve also been clear that there is no evidence that such an approach will work — but there is plenty of evidence that doing nothing and just naval gazing is enormously harmful to hospitalized patients. So, if you find the status quo unacceptable for hospital care — it may be worth experimenting with new P4P models.

    Here’s my latest piece in JAMA about this:


  17. Stephen and Ross, thanks and I agree with your thoroughly supported article. What if we created the same incentives that make many orders arrive in one day from Amazon or Ebay? It’s called anonymous public feedback ranking. With every provider and item having a code this enables each billing event to potentially supply a chit to the patient that allows them to login anonymously to leave feedback on code relevant programmed questions regarding their care or care items. This could produce a statistical database showing rankings, volumes and pricing. Published pricing with quality transparency would revolutionize the market and apply competition to all aspects of the healthcare system.
    My plan for this can be read here: https://www.change.org/p/hhs-secretary-of-tom-price-one-published-pricing-healthcare
    A petition started a year ago by ex-hospital president Steven Weissman with 111,000 signatures is here: https://www.change.org/p/end-predatory-healthcare-pricing

  18. Thanks for the article.
    As a front line MD that has reported PQRS for 5 years, and been the physician IT leader of our hospital for years , I can tell you that it has done nothing but add more administrative burden to our day and its ripe with errors. MACRA is even more of a burden and will fail without question.

    1. Its ALWAYS the DOCTORS fault: To assume that 1 physician is responsible for ALL the patient’s health measures/outcomes is ridiculous. An MD can try all they can to control blood sugar, but if the patient continuously ignores good advice, eats Snickers at will, is that the MDs fault? Or if they have a team of MDs, whos fault is it?

    2. ATTRIBUTION problem: So if I do a fix a fractured hip on a patient, and they do fine from that, but 72 days into the performance period, they get readmitted because they also have ongoing renal disease and have a new electrolyte imbalance, does that get attributed to me (ortho) because of the renal issues? Or how much gets attributed to me? 10%? 1%? Well its 100% now because its a readmission within 90 days. Does that make sense? Worse is when there are a dozen MDs taking care of a patient from cardio, endocrine, renal, pulmonary, etc. How do we attribute cost/value to that patients care? And this happens ALL the time with Medicare patients. Huge attribution problem.

    3. The Measures themselves: All the measures are made by biostatisticians, non front line MDs. Do we really think that if I say that a patient received preop antibiotics (which happens 100% of the time) on all my surgery patients, will really change ANY value or outcome? That I have to collect, analyze, report, attest is just ridiculous. Do we REALLY think that if I mention you should quit smoking, that it really helps patients quit? Or lose weight? Or that I discussed nonoperative care with a patient I am doing a total knee on? Do you really think we do no try nonop modalities, discuss all the nonoperative care of knee arthritis with patients? Give me a break.

    4. The Man in the Middle: All this data collecting takes a ton of time that costs me money. It requires EHRs to have the ability to correctly track the nonsense that costs me money to pay for updates to EHR every year. We have to pay someone to “Extract” the data. We have to pay a registry to take that extraction and convert it to something that Medicare wants to see. All this costs SIGNIFICANT money. Everyone in the middle has NO responsibility they get paid no matter what. Exactly what they charge. No quality questions for them. We have to pay for any repeat of this with an Audit after attesting to the correctness of the data. Its a VERY costly nightmare.

    5. Extract What? It has been reported more than once, that after you get the data extracted, that the registry/extractor can tell you what measures you qualify for…AND guess what, if you are a cardiologist and mentioned “back pain” one time in a note, AND did not order xrays, you get 100% on that measure because you didnt order xrays. Even if you never treat back pain and you were just adding to your narrative. That is the “value” that CMS wants? You are such a great doctor, you did not order xrays 100% of the time on one patient, even though you dont treat back pain. This happens ALL the time. So you are going to say Dr X is SOOOO valuable because on the measures he ‘qualified” for he scored 100%, even though it is completely meaningless, useless and without value.

    6. Improve this- After all our complaining about MU PQRS etc, CMS came up with a NEW program for Clinical Quality Improvement Activities. Yes a complicated scoring scheme of medium and low activities that add up to 60 or 90 points, etc. Again completely irrelevant and not a SINGLE study shows any benefit, we have to add that to the ACI, QPP, COST, attestation mess. Again, I have to pay someone to send that I did any of these activities to Medicare.

    7. That’s not my cost- Again, if a patient gets a total knee, slips on ice and falls, fractures their hip on the opposite side, the hip surgery is performed by a different MD, does that cost go to the original TKA doc if it is within 90 days? If that patient gets an infection in the new hip, does that cost also go to the original TKA MD? Who does the math? If anyone one ever saw a Medicare quality QRUR report it looks like a shotgun graph to a wall. You can’t tell anything about quality on it. Its a joke.

    8. Buzzword care: ACOs Bundles, all have consistently failed. Even with the constant, ever increasing failures and costs to medicare, they cannot seem to let go of a good buzzword care scheme. Bundles will ONLY lead to doing less operations or caring for patients that have zero medical problems, because if just one person gets readmitted in a bundle, it can blow your bundle and cost you. Play it out. ACOs Bundles, all want you to do as little as possible care, for a fixed price. That never works. People know when they are getting ignored, pushed off, etc. Who would be silly enough to do any total knee or hip on someone with diabetes, or any medical issues, and risk the clawback of money because of post op readmission or problems or increased cost of care because they have no one at home to help them recover, and they need a SNF admission.

    9. AAPM Risky Business: In even more futility, CMS wants MDs to take MORE risk and somehow read the crazy complicated mess that is AAPMs. You need 4 consultation prior to even thinking about starting these, a policy expert, accountant, lawyer, clinical manager, etc. So right away, you are $250K in the hole before even starting. And take more risk? When we see a Medicare patient, we do NOT collect our fees up front, so we take risk right out of the gate, and if you think that Medicare does not deny claims for all kinds of dubious reasons, then you never saw an EOB from them. We take too much risk already for not getting paid. Forget these. MDs are neck deep in risk. We do not want more.

    So there is you value based care buzzword mess from a front line MD. P4P has NEVER been shown to improve outcome or care at decreased cost. Not a single study. Everyone always states that look readmissions went down after the penalties kicked in….NO…observation admits went up the same amount as the readmits went down. Duh. As for the rest of the improving quality numbers, as you stated in the article, its not due to P4P or Value based care or penalties. Its that we are getting better all the time at what we are doing, not from these programs.

    The final problem is that CMS is driving MDs out of practice in droves. This is at a crisis level. Burnout has steadily increased and is now at levels that have never been seen in healthcare. We need to do EVERYTHING we can to get caregivers away from the computer and counting and reporting and attesting and auditing and doing this and that in the computer at this time, because MEDICARE will deny the admission, payment or claw it back. It will NOT be reversible on our current glide path. We already have a massive shortage of MDs, and its only getting worse. MACRA reporting and MU3 should be indefinitely suspended. CMS should also drop ALL cert EHR requirements to spurn innovation. Get out of the way of MD IT interaction. We all have hope about the new administration, but if they fail to do these simple rollbacks, a crisis bigger than they can imagine will come to fruition.