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Mathematica Report Highlights Barriers and Benefits to Physician Payment Reform
Contact: Cheryl Pedersen, (609) 275-2258
WASHINGTON, D.C. (December 15, 2008)—A new policy brief from Mathematica Policy Research, Inc., suggests that reforms to the payment system used to compensate physicians could help to improve performance of the health care system.
The brief highlights the central role physicians play in care delivery—driving the use, content and costs of most health care services including laboratory and radiology tests, hospital and post- acute care, and prescription drugs. While many factors drive physician decision-making, financial incentives in any system used to pay physicians will, by their nature, influence what physicians do, what services are provided, and at what cost. Well-targeted changes to physician payment incentives can drive broader system change.
The brief reviews what research has shown about using physician payment to improve the performance of the health system. It concludes that enhancing system performance requires more than improving how well individual services are performed and how each provider behaves. It suggests that future priorities move beyond pay for performance of individual services and reward physicians for influencing the totality of a patient’s care across all providers and settings. It also observes that change must address several barriers, including fragmented medical practices, a payment system that rewards volume and procedures, eroding incentives for primary care, and narrowness and limits of performance measures.
Mathematica senior fellow Marsha Gold and senior health researcher Suzanne Felt-Lisk identified key lessons from experience with current physician pay-for-performance plans, which have yielded only marginal effects but provide valuable insights on design and implementation issues and approaches that may facilitate success. These include:
- Match terms of payment to desired outcomes.
- Use a broad and balanced set of measures.
- Anticipate physician reaction and work for trust.
- Incentive size is important.
- Information infrastructure will influence effectiveness.
- The feasibility of pay for performance varies across markets and practice settings.
- Physician engagement is critical.
In the future, the authors conclude that more attention should be paid to (1) moving beyond P4P for individual services to reward physicians for influencing the totality of a patient’s care; (2) factoring in equity considerations to provide appropriate incentives to treat vulnerable populations; (3) enhancing the role of primary care and care coordination; (4) aligning incentives across provides; and (5) promoting “value” while recognizing the tensions associated with decisions about how to use limited resources.
Lead author Gold notes that, “We need to better match the incentives in our system to the goals and performance we seek from the health care system. Payment incentives should encourage physicians to be concerned about the total patient experience, including care they do not provide directly.”
“Using Physician Payment Reform to Enhance Health System Performance” by Gold and Felt-Lisk is available on the web at www.mathematica-mpr.com/publications/redirect_pubsdb.asp?strSite=/PDFs/physpaybrief.pdf.
Mathematica®, a nonpartisan research firm, conducts high-quality, objective policy research and surveys to improve public well-being. Its clients include federal and state governments, foundations, and private-sector and international organizations. The employee-owned company, with offices in Princeton, N.J., Washington, D.C., Cambridge, Mass., and Ann Arbor, Mich., has conducted some of the most important studies of health care, education, welfare, employment, nutrition, and early childhood policies and programs in the United States.