Seven design features that could improve P4P

Although widely used in health care, pay-for-performance (P4P) incentives have resulted in only modest improvements, says a new study.

Rand Corp. explores seven design features that could improve P4P programs — features that primarily rely on changing physician behavior.

“Pay-for-performance programs are designed in a number of ways. One of the common designs provides physicians with large incentives after a program has been completed,” says Ateev Mehrotra, MD, a Rand researcher and the lead author.

“But if I want a physician to do something and I have a choice of giving him either $1,000 in one lump sum, or $10 one hundred times, I will see a stronger response by giving small incentives more frequently.”

Mehrotra and his colleagues looked at mammograms as an example.

“If a health plan wants to create an incentive program around giving mammograms, it can provide the physician a small dollar amount every month or every time a patient gets a mammogram, as opposed to waiting until the end of the year. You’ll probably get a more effective response from physicians.”

Mehrotra says it’s not a lack of knowledge or interest on the part of the physicians, noting that most physicians are concerned about the quality of care they deliver.

He says that it’s more likely that “you get so busy during your day that it gets hard to focus your energy on that specific thing at all times.

“We hope that our suggestions help clinical executives the next time they need to design a program,” says Mehrotra.

“Incorporating a well-thought- out-P4P program is critical. You can design either a program that’s not going to work or one that’s going to have a significant impact on the quality metrics that you care about.”

Making P4P programs more successful

The researchers at Rand point out that some design changes they suggest conflict with each other. They report, in the American Journal of Managed Care, that the suggestions should be viewed as a “menu of options to be considered” and that they are not meant to be applied all at once.

Commonly used designs Suggested improvement
Give the incentive as a lump sum. Divide the sum into a series of smaller incentive payments.
Create relative thresholds (e.g., top 25 percent of physicians receive bonus). Use tiered absolute thresholds (e.g., 25 percent, 50 percent, 75 percent, and 90 percent).
Instill long lag time between care and receipt of incentive. Shorten lag time.
Use withhold payments (a perceived loss in income). Use bonus payment (a perceived gain in income).
Design a program that is complex (e.g., shared savings). Simplify program to minimize uncertainty.
Give bonus as an incremental increase in the doctor’s usual payment. Decouple incentive payment so that it is given separately and perceived as special.
Use monetary incentives. Use goods or services (e.g., $250 gift certificate to a fine restaurant rather than $250 in cash).

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