Medicare’s P4P Program Likely to Accomplish Little

Medicare’s new hospital pay-for-performance program for all acute care hospitals will begin in October 2012. It will be the largest Medicare quality improvement initiative for hospitals to date. Using 2009 data on hospital performance, we calculated hospital performance scores and projected payments under the new program for all eligible hospitals. Despite differences across hospitals in terms of performance, expected changes in payments were small, even for hospitals with the best and worst performance scores. Almost two-thirds of hospitals would experience changes of just a fraction of 1 percent. Although the program will in effect redistribute resources among hospitals, our data suggest that the redistribution is not likely to cause major problems because the amount being redistributed is also small.

Health Affairs study.

Comments (8)

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  1. Alex says:

    If the changes are small then expect their effects to be small as well.

  2. Publius says:

    I do not like the pay for performance method. It should unquestionably be changed.

  3. Devon Herrick says:

    It’s very hard to do bureaucratically what millions of consumers do individually; that is, shop for value, demand quality and take your business elsewhere when the value isn’t up to par. P4P programs often don’t work well because it’s just too easy for providers to game the system. In the presence of third-party payment, providers often maximize against reimbursement formulas. Moreover, patients usually perceive costly services (that are not worth the money if patients were paying their own bills) to be valuable when someone else is paying the bill.

  4. seyyed says:

    this just goes to show how difficult it is create incentives for effective quality improvement

  5. Alice says:

    Keep in mind the studies that show that P4P will bankrupt some hospitals. I’m not entirely sure what is going to happen

  6. linda gorman says:

    So, in an era obsessed with randomized studies in health care (remember evidence-based care and the information pyramid), CMS is going to do roll out its P4P program in all acute care hospitals?

    Not a control group in sight. Perhaps they already have the answer?

  7. Eric says:

    Sounds like the incentives need to be more powerful

  8. Dorothy Calabrese MD says:

    There is no possibility that REAL. . . honest. . . dedicated physicians will compromise their duty to their patients to “win” the P4P game. My medical school hospital, Columbia University NY Presbyterian routinely takes patients top medical centers reject as “hopeless” Columbia sanctifies and saves lives by doing the double-lung heart transplant, or whatever it takes, when no one else will do it. My boy reached the top of a lung transplant list at a top academic transplant center that would never pick him. . . always preferring smokers first whenever possible – so as to have the best statistics west of the Mississippi. As an insider in my profession, it was still very difficult to find the right medical centers to travel to that addressed the different components of the catastrophic illness of my child.

    What is the “science” that the government P4P algorithm employs to evaluate a patient like my son, who should have died as an infant, but lived a wonderful life to 17 years with extraordinary American medical care?

    P4P will certainly improve the coffers of MGMA, Mc Dermott Will and Emery and other top management consultants and the lobbyists.

    Dorothy Calabrese, M.D., San Clemente, CA