Diagnosis
You've seen it before – but what does pay-for-performance really mean for you?
Prescription
Understanding incentives could change the way you do your job
If you've been through managed care training, you've probably had it up to here with the endless list of acronyms and abbreviations
you need to contend with … but here's one more that's slowly working it's way into the sales professional's lexicon: P4P.
P4P is short for "pay-for-performance," a concept that was
introduced several years ago and is now a commonly employed reimbursement strategy in both the commercial and government healthcare
environments.
This article defines pay-for-performance, recaps its brief evolution, explains what's happening in today's market, and describes
the potential ways it can impact the utilization (and hence, sales) of pharmaceutical and biotechnology products.
As you'll learn, the future may include performance-based reimbursement for your company's products – so the content that
follows is well worth your attention.
What is pay-for-performance?
Definitions for pay-for-performance abound, but, essentially, P4P refers to a healthcare compensation program that features
financially structured incentives for providers in exchange or as reward for the achievement of measurable performance benchmarks.
How one plan does it
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Also known as "value-based purchasing" or "quality-based purchasing," the P4P payment model rewards physicians, hospitals,
medical groups and other providers who meet specific performance standards for quality and efficiency. P4P programs typically
feature some mix of incentives and/or disincentives. Incentives might include differential reimbursement rates or bonuses
for meeting certain targets; commonly used disincentives include forfeited bonuses for exceeding targeted budgets or financial
penalties for committing medical errors.
Regardless of their structure, the objective of pay-for-performance systems is to ensure the consistent delivery of high-quality,
cost-effective care. The pay-for-performance approach assumes that financial rewards are strong motivators for managing behavior
among providers.
Measurement criteria
Measurement criteria in pay-for-performance programs generally include some combination of the following factors:
- Utilization and cost management (e.g., the number of emergency department visits per patient per year)
- Clinical quality and effectiveness (e.g., the percentage of patients with asthma who are taking appropriate medications)
- Patient satisfaction (e.g., the percentage of patients who would recommend the physician [or hospital, or clinic] to others),
- Administrative capabilities (e.g., the organization's level of information technology)
- Patient safety (e.g., the percentage of patients monitored for allergic drug reactions)
These and similar measures may be developed locally by a health plan or employer, or nationally, by recognized authorities
such as the National Committee for Quality Assurance (NCQA).
