Unbiased Analysis of Today's Healthcare Issues

Empirical Findings on P4P

Written By: Jason Shafrin - Jun• 12•07

Pay-for-performance (P4P) is one of the latest hot topics in the health policy world. Yet it has not been conclusively answered whether or not P4P incentives affect the quality of care given. Meredith Rosenthal and Richard Frank review some of the more compelling empirical studies in their April 2006 paper in Medical Care Research & Review.

Hillman et al. (Am J Pub Health 1998). In this study, 52 capitated, non-exclusive primary care practices were randomly assigned to either a control group or treatment groups in order for the authors to determine the affect of financial incentives on cancer screening. The treatment group received a bonus equal to 20% of capitation payments if it was one of the top three performers and a payment of 10% if it was in the fourth, fifth or sixth best performer range. The study detected increased screening in both the control and treatment groups, but difference in screening rates between the control and treatment was negligible.

Hillman et al. (Pediatrics 1999). This was also a randomizd trial, but the focus was on childhood influenza immunization rates. The control group was compared against 2 treatment groups: one which received feedback on their performance and another which received feedback and a bonus payment if sufficient number of children were immunized. This study also found financial incentives had no effect on immunization rates.

  • Rosenthal and Frank give a few explanations why Hillman and co-authors found financial incentives to be ineffectual in either of their studies. First, the authors had a small sample size and short time horizon (18 months). Secondly, the financial incentives only pertained to Medicaid capitation patients. If a physician contracted with many non-Medicaid health plans (e.g.: private HMOs, PPOs, etc.), the magnitude of the bonuses would have been small. Finally, the physicians may not have been aware of the program or were unaware of approximately what level of cancer screening/influenza immunization would be needed to receive a bonus.

Kouides et al. (1998). This study had a treatment and control group where the treatment group received between $0.80 to $1.60 per person immunized against influenza. The authors found a statistically significant 7% increase in immunization rates between the treatment and control. Since the two groups were not randomized, it is likely that those physicians who more aggressively immunize patients choose to be in the treatment group.  This selection effect likely biases the results. Further, the authors note that the treatment and control groups differed significantly in terms of practice size and specialty mix.

Fairbrother et al. (1999). This study also looked at the impact of financial incentives and performance feedback on childhood immunization rates. The framework of the study had one control group and three treatment groups. The first treatment group received feedback every 4 months for one year, the second group received feedback and a bonus for receiving a target immunization rate, and the third group received feedback and a bonus for timely immunization. “The rather sizable bonus did improve immunization rates, but this was primarily achieved through better documentation of immunizations children had received outside of the practice, suggesting no real gain in quality of care.”

One problems with the study is that each of the 4 groups (i.e.: control and the 3 treatment groups) only had a sample size of 15 physicians. Further, the 8-month time horizon may not have been sufficient to detect a significant change.

Roski et al. (2003).  This study examined how financial incentives affected smoking cessation care.  Forty clinics were randomized into three groups: 1) a control, 2) a financial incentive-only group, 3) a financial incentive group with a computerized patient registry linked with counseling over the phone.  The authors found that documentation of smoking status and documentation of advice to quit smoking increased significantly compared to the control group.  “Despite improved adherence to guidelines, however, there was no significant impact on smoking cessation rates. In addition, in a somewhat puzzling result, the clinics that were offered both the financial incentive and access to the patient registry and telephonic counseling system showed no improvement relative to the control group.”

Amundson et al. (2003).  This study looks at a study in the HealthPartners system in Minnesota in which physicians received a bonus of over 80% of patients were asked if they smoked and were subsequently counseled to quit smoking (i.e.: ask and advise rates).  The ask and advice rates increased significantly but since there was no control group, one can not determine if the increase is due to the financial incentives or a time trend.

Overall it seems that the studies cited by Rosenthal and Frank do not show that P4P caused large changes in care.  One issue is that most of the financial incentives were small relative to overall physicians pay.  Also, P4P may increase documentation of care–in order that the physicians can receive the financial bonus–but may not actually alter care levels.  It is also possible that the changes in care practices occur over a longer period of time (i.e.: more than 1 or two years), which would not be captured in these shorter term studies.  While I do not doubt that large financial incentives will cause physicians to perform more care on the dimensions measured, P4P may also cause physicians to substitute their effort levels away from un-measured care dimensions which may be equally important to patient health.

One can only conclude that significantly more research is needed to clarify the effects of P4P.

  • Rosenthal, Meredith; Frank, Richard; 2006.  What Is the Empirical Basis for Paying for Quality in Health Care? Medical Care Research and Review, Vol. 63, No. 2, 135-157 (2006)
  • Hillman, A. L., K. Ripley, N. Goldfarb, I. Nuamah, J. Weiner, and E. Lusk. 1998. Physician financial incentives and feedback: Failure to increase cancer screening in Medicaid managed care. American Journal of Public Health 88 (11): 1699-1701.[Abstract/Free Full Text]
  • Hillman, A. L., K. Ripley, N. Goldfarb, J. Weiner, I. Nuamah, and E Lusk. 1999. The use of physician financial incentives and feedback to improve pediatric preventive care in Medicaid managed care. Pediatrics 104 (4): 931-935.[Abstract/Free Full Text]
  • Kouides, R. W., N. M. Bennett, B. Lewis, and J. D. Cappuccio. 1998. Performance-based physician reimbursement and influenza immunization rates in the elderly. The primary-care physicians of Monroe County. American Journal of Preventive Medicine14 (2): 89-95.[Medline]
  • Fairbrother, G., K. L. Hanson, S. Friedman, and G. C. Butts. 1999. The impact of physician bonuses, enhanced fees, and feedback on childhood immunization coverage rates. American Journal of Public Health 89 (2): 171-175.[Abstract/Free Full Text]
  • Roski, J., R. Jeddeloh, L. An, H. Lando, P. Hannan, C. Hall, and S. H. Zhu. 2003. The impact of financial incentives and a patient registry on preventive care quality: Increasing provider adherence to evidence-based smoking cessation practice guidelines. Preventive Medicine 36 (3): 291-299.[Medline]
  • Amundson, G., L. I. Solberg, M. Reed, E. M. Martini, and R. Carlson. 2003. Paying for quality improvement: Compliance with tobacco cessation guidelines. Joint Commission Journal on Quality and Safety 29 (2): 59-65.[Medline]

You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.