Improving the value of pay-for-performance: an evaluation in hospitals

Summary

Principal Investigator: RACHEL WERNER
Affiliation: University of Pennsylvania
Country: USA
Abstract: DESCRIPTION (Provided by the Applicant): Health care costs more in the United States than in any other industrialized country and these costs are continuing to rise. Since 2000, the growth in health insurance premiums has outpaced the growth in workers' earnings almost every year. Medicare is the largest single payer for health services in the United States and is expected to grow at a higher rate than private health insurance. These rising costs of health care threaten not only the sustainability of the Medicare program but also the affordability of health insurance. Despite high health care spending, more costly care has not translated into higher-quality care, and our health system is not providing optimal value to its principal customers: patients, payers, and society at large. As health care resources become increasingly constrained, improving the value of health care is at the center of current health reform debates. The current cost-quality mismatch highlights potential opportunities to improve efficiency by focusing health care delivery on high-value care. In this project, we propose to examine one way to improve health care value - through pay-for-performance (P4P). When P4P aligns financial incentives with high-quality and high-value care, it has the potential not only to improve the quality of health care but also the cost-effectiveness of care. The impact of P4P on improving care may be particularly large among certain providers - for example those that are eligible for the largest bonuses or those with performance just below the target set by the payment strategy used in P4P (e.g., incentives based on achieving top-ranked performance or attaining a target level of quality). Our objective is to examine the impact of P4P on the value of healthcare and to examine which providers are most likely to have value improvements under P4P. We measure the response to P4P in the setting of the Centers for Medicare and Medicaid Services' hospital P4P demonstration project, testing whether P4P reduces costs or improves the value of care for patients with acute myocardial infarction (AMI), one of the most common causes of hospitalization, disability and death in the U.S. We measure the value of P4P in three ways: from society's perspective (examining the net monetary benefits of reduced AMI mortality); from Medicare's perspective (examining changes in Medicare's costs of providing an episode of AMI care); and from a hospital's perspective (examining changes in hospitals costs and reimbursements). Our specific aims are: Aim 1) To examine the impact of P4P on the value of care; Aim 2) To examine the impact of the size of P4P bonuses on changes in the value of care; and Aim 3.) To explore the impact of different P4P payment strategies (bonuses based on top performance, target attainment, or improvement, and penalties based on low performance) on changes in the value of care.
Funding Period: 2009-09-30 - 2012-07-31
more information: NIH RePORT