The Real Reason Physicians Should Be Wary of P4P

By Scott Hultstrand, SCMA General Counsel

P4P, or pay for performance, pays physicians based on a theory that economic incentives will drive them towards better care process choices and result in better patient outcomes.  So, the thought is if you give a slight percentage bump in reimbursement for giving obesity counseling to a diabetes patient, then more physicians will give the counseling.  One problem with P4P is even this simple example raises a host of complicated questions.  For example, are we sure that obesity counseling has any significant impact on diabetes care?  If we think it does, how do we go about actually making that connection, especially when so many other factors are involved in the success of diabetes care?  One way some payers have tried to resolve this is to generate P4P bundles, where a physician is required to complete all of seven to ten processes that have been linked to improved outcomes.  For a diabetic, then, the physician would have to provide the obesity counseling, but also refer the patient for eye exams once a year, keep track of weight fluctuations, measure HbA1C levels once a quarter, and the list goes on.   

In the Wall Street Journal last week the P4P debate continued, and you can read the standard arguments for and against in this article.  As an aside, the article was preceded by a WSJ survey asking “What motivates physicians?”…so far, after 854 votes (albeit quite unscientific), 58.5% of respondents say “What’s best for the patient” while the rest of the vote is split equally between “Financial considerations” and “Fear of lawsuit.” 

Instead of hashing and re-hashing the arguments for and against P4P, which has been ably done elsewhere, let’s approach the P4P debate from a different angle by asking the following question:  “Should the physician community change the subject?”  In other words, is all of this discussion about P4P masking a more significant issue? 

Here’s why this question is important.  Fundamentally, P4P is a tool that the payers are using to pad their pockets.  First off, I’m not against payers earning a living.  And I’m not against all P4P;  it can be useful, especially as a transitional payment structure or to encourage under-utilized processes that have been reliably proven to enhance patient care and experience.  Caveats aside, though, P4P is a way for payers to leverage the skills that only physicians possess to increase their own profit margins.

How is this so?  It’s actually really simple.  Most P4P measures are designed to do one of several things:  (1)  Directly decrease costs in the treatment of patients (e.g., a measure that gives bonuses for reduced imaging utilization);  (2)  Increase population health to avoid costs of chronic conditions (e.g., our diabetes examples above); or (3)  enhance individual patient care to avoid costs associated with complications from procedural care (e.g., a payment withhold unless hand-washing rates are at 100%). 

Do you see a common theme of P4P?  Reducing costs to the payers.  Now there’s nothing wrong with reducing costs (assuming that necessary treatment is not being skimped).  What’s wrong with the P4P scheme is that the payers are profiting greatly from the work of physicians, and physicians are receiving infinitesimal rewards for doing the heavy lifting. 

Here’s why.  The fee-for-service structure upon which P4P is built does not have a mechanism for sharing savings.  So, while a physician might enjoy a 1% bump in pay for complying with a host of new process measures, the payer is going “wee wee wee all the way home” as it pockets the millions of savings that are achieved.  And don’t forget that the physician is getting that 1% bump in a reimbursement scheme that has likely not kept up with inflation, imposes a host of administrative and bureaucratic obstacles in the way to getting paid, and continually reduces the clinical autonomy that years of training and experience deserve.  P4P itself in many instances is another example of payers telling physicians what they can and can’t do.  And it’s the fee-for-service system that perpetuates this.

Don’t misunderstand me.  Fee-for-service has a lot of positives, and there may be ways to preserve the original simplicity of this payment mechanism.  But I don’t think anyone would disagree that “simple fee-for-service” has become an oxymoron.  The physician community is in the driver’s seat when it comes to possessing the expertise and contact required to achieve better patient outcomes at lower costs.  The payers can’t do this alone.  But right now the payers are paying physicians pennies on the dollar to achieve what they can’t, and then enjoying the bulk of the profits that come from better outcomes and lowered costs.  Now I know that it’s not all about money for physicians, but I also believe in getting paid fairly for your accomplishments.  That’s not happening, and won’t happen with P4P, until physicians come up with a new way of being paid, whether it be a fee-for-service overhaul or other payment structures.