Opportunities and Obstacles
Glen P. Mays, Ph.D., M.P.H.
Department of Health Policy and Administration
UAMS College of Public Health

P4P in Health Care
Use of financial incentives to improve quality, efficiency, productivity
Not a new concept, but new applications are emerging post- managed care
Considerable experimentation by insurers, purchasers, providers
Considerable variation in methods
– Target populations
– Performance measures and criteria
– Type and strength of incentives

Why Consider P4P in Public Health
Wide variation in the performance of essential public health services
Persistent disparities in population health outcomes
Gaps in adoption of evidence-based public health interventions
Growing demands for accountability

P4P in Health Care
Inter-organizational
– Insurer contracts with hospitals & physicians
– Employer or government contracts with insurers
Intra-organizational
– Hospital compensation for employed physicians, nurses, other health professionals
– Medical group compensation for individual members

Potential Effects of Incentives
Improvement effects
– Service quality
– Cost/efficiency
– Service volume, output, productivity
Selection Effects
– Attract “better” providers, staff
– Attract a “better” patient population

Potential Advantages of Incentives
Align incentives of purchaser and provider
Promote accountability
Reduce need to monitor inputs/effort

Potential Disadvantages of Incentives
Higher payments required to attract risk-averse providers
Distortion of service mix away from activities not measured, rewarded
Reinforcement of disparities between high and low performing providers
Creation of stressful work environments that may reduce job satisfaction, increase turn-over

Design of Performance Incentives
Basing payments on health outcomes is problematic:
– Exogenous & random variation in outcomes
– Noisy measures
– Attribution
Alternatives: base pay on processes or outputs
– Adherence to evidence-based practices
– Service volume
– Cost

Challenges in Design and Implementation
Finding valid, reliable, relevant measures
Data availability and quality
Securing buy-in of providers
Finding “new dollars” for sufficiently strong incentives
Reducing opportunities for gaming

Unique Challenges for Public Health
Limited availability of off-the-shelf measures
Inflexible, categorical funding streams
Public-sector purchasing, hiring, compensation rules
Many areas of shared accountability
– Local and state agencies
– Public and private providers
– Individual and population health interventions
Time horizon for implementation and impact of community-based interventions

Building Blocks for Public Health P4P
Existing Performance Measurement Sets
– National PH Performance Standards
– State measurement sets

Available now

Process measures
Self-assessed
√
Attribution and accountability issues
? Linkage to desired outcomes

Building Blocks for Public Health P4P
Existing Population Health Measures
– Vital records: mortality and birth outcomes
– Notifiable disease surveillance data

Available now

Linkage to desired outcomes
Attribution and accountability issues
Time horizon

Building Blocks for Public Health P4P
Measures of Guideline Adherence
– Guide to Community Preventive Services
– Guide to Clinical Preventive Services
– Tobacco Control Program Guidelines

Guidelines available now
? Existing data on guideline adherence

Linkage to desired outcomes

Attribution and accountability issues
? Time horizon

Incentive Design Issues
Use of existing public health funding streams?
Handling pass-through funding?
Reward quality targets or quality improvement?
Economic feasibility: do rewards to offset the cost of improvement?
Include incentives and penalties?

Measurement Issues
Types of measures: structural, processes, outcomes
Risk adjusting performance measures for community need?
Including population/community perceptions of service?

Getting from Here to There
Small scale demonstrations and pilots
Engage the practice community in design, implementation, and evaluation
Use start-up strategies that reward measurement and reporting
Phase in gradually to avoid large-scale shifts in resources