GAO reveals pay-for-performance lessons from private initiatives

With several pay-for-performance initiatives set to expand in the near future, the Government Accountability Office (GAO) examined private sector initiatives that base or adjust physician payment rates on care quality and efficiency, and assessed their applicability to the Medicare program.

A December 2012 report sought to answer two questions: what are the common themes among private entities with initiatives that offer payment incentives for high quality and efficient care, and to what extent are Centers for Medicare & Medicaid Services (CMS) financial incentive initiatives reflecting these themes?

“Because physicians both directly and indirectly affect total healthcare spending, many private healthcare purchasers, including insurers, have initiated programs to reward high-performing physicians and encourage patients to obtain care from these physicians, and these programs have evolved to reflect the increased sophistication of payers and providers,” the report read. “As these efforts have evolved, some private purchasers have sought to improve quality and efficiency using models of coordinated care delivery that may incorporate elements of an accountable care organization or a patient-centered medical home.”

While these initiatives have largely occurred within the private sector, Medicare is now seeking to use its influence to further facilitate changes to healthcare delivery models through initiatives including the shared savings program, the physician quality reporting system, value-based payment modifier program, the comprehensive primary care initiative and the physician compare website.

To learn how these initiatives could build off of existing programs, the GAO examined 12 initiatives organized by nine private entities and made determinations based on interviews with providers representing independent practice associations, a primary care group practice, hospitals and medical societies, as well as commentary from the American College of Cardiology and the American Medical Association.

The exam revealed that there was an interest among stakeholders to apply performance-based incentive payments at the group level rather than the individual-physician level, to use a nationally endorsed set of performance metrics across all payers, to issue incentives for meeting absolute benchmarks and for demonstrating improvement and to have financial incentives delivered more shortly after the conclusion of a measurement period.

Based on these results, the report recommended that CMS adjust the value-based payment modifier program to provide incentives for incremental improvement rather than just for meeting absolute benchmarks, make payments in a timely manner and develop a strategy for measuring the performance of solo and small physician practices.

“Despite similarities to some themes found among private entities with physician payment initiatives, other themes are not fully reflected in CMS’ value modifier program,” the report concluded. “Until CMS provides incentives for improvements, it is likely that few physician groups that are not already high performers will opt to participate in its quality-tiering approach.”

The complete report is available on the GAO website.