Physician Compensation

Integrated Healthcare Association and P4P

The largest P4P program is run by California’s Integrated Healthcare Associates (IHA). A 2006 report (“Advancing quality through collaboration“) chronicles IHA’s progress in working with the California Association of Physician Groups as well as Dr. Stephen Shortell to establish a P4P measures. The report has two very interesting summary tables: one describes how the IHA P4P measures have evolved over time, the other how payment methodologies vary by participating health plan.

Total payments to California physician groups for P4P programs totaled $37.4m in 2003 and $54m in 2004. Of the $54m, $26m went towards P4P clinical measures, $22m went to P4P based on patient experience, and the remaining $6m went for improvements in information technology. “Payments to individual physician groups ranged from 0 to $4.50 pmpm (per member per month). On average, the incentive payment was only about 1.5% of physician group income.

Through these efforts, the report finds that measured quality dimensions are improving but “‘breakthrough improvement’ has not been achieved.” Further, the report believes that much of the quality improvement is likely due to better data collection and record keeping rather than actual changes in care.

Where will IHA move P4P in the future? Recommendations include:

  • increasing incentive payments up to 10% of total physician compensation by 2010 (if P4P payments are trivial, then there will likely be no behavioral change)
  • incorporating better measures of risk adjustment into capitation payments (this will discourage physicians from refusing care to sicker patients for fear of reducing quality score measures)
  • addition of an efficiency domain, including appropriate resource use measures (quality does not mean quality at unlimited cost to the payers)
  • avoiding incentivizing physicians to ‘teach to the test’ (physicians may decrease quality care in dimensions not measured by the IHA’s P4P program).