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).

Source: Mehrotra A, Sorbero ES, Damberg CL. Using the lessons of behavioral economics to design more effective pay-for-performance programs. Am J Man Care 2010;16:497–503

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.