Wednesday, February 13, 2008

P4P may finally be growing up

I've heard anecdotally that health plans are retrenching on so-called pay-for-performance (P4P) reiumbursement programs because they're not getting the return that they hoped to get. There seems to be some evidence of this in the data as well -- projections from 18 months ago suggested gushing growth (see The state of P4P programs), but the trend more recently seems to be on refinement rather than expansion (see It's everywhere but measuring effectiveness of P4P is challenging). There seems to be a trend out there away from pure P4P and toward mixed reimbursement models that blend in capitation with performance-based payment, exemplified by two new approaches.

First is the so-called "medical home" idea, which has been articulated and promoted by a variety of medical specialty socieities (for example, see Medical home could rescusitate primary care and Joint Principles of a Patient-Centered Medical Home Released by Organizations Representing More Than 300,000 Physicians). While a lot of the focus of the medical professionals has been on bolstering primary care, the business community has recently jumped on the bandwagon because of the financial benefits of the approach. Bridges to Excellence estimates that the medical home approach yields savings of $250-$300 per patient per year by reducing unnecessary specialist and emergency room visits and preventing acute medical episodes that result from poor preventative care (see Group Offers Doctors Bonuses for Better Care). Since the average primary care physician cares for roughly 2000 patients, this can add up to real money real fast.

The second approach is in the creation of alternative payment models such as that announced by Blue Cross Blue Shield of Massachusetts earlier this year (see A New and Different Way to Pay for Care). This approach has had some early bumps, but it's still early (see Blue Cross faces uphill climb over flat-sum payments).

The best description I've seen of the benefits of moving back toward some type of capitation model is in Benjamin Brewer's column in yesterday's Wall Street Journal (Finding a Medical Home May Be Just What the Doctor Ordered). Dr. Brewer gives an excellent ground-level view of what it means to pay physicians to manage patients instead of acute episodes, and why such an approach might really offer benefits to patients and physicians alike.

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