News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
Sign In

The Flipside of the Pay-for-Performance Program Results in Britain

We wanted to make sure to report on the success of the pay-for-performance program in Britain and give it adequate space in Dark Daily and it’s full due. However, we also wanted to note, in this separate piece, that the success of the program in Britain may be slightly exaggerated.

In the study Pay for-Performance Programs in Family Practices in the United Kingdom, targets were met for 83% of eligible patients and practices earned nearly 97% of possible points available. The National Health Service (NHS) anticipated that practitioners would earn only 75%. Why did so many practitioners perform so well? There are a couple of plausible explanations.

First, the targets for high performance may have been too easy for practitioners to achieve. Trial and error is the only effective way for the NHS to find out how ambitious the targets should be. To address the possible problem of targets being set too low, the NHS has altered the 2006-2007 scheme so that all minimum and some maximum payment thresholds have been raised, 30 indicators have been dropped or modified, and 18 new indicators have been introduced.

The second reason that so many practitioners did an exceptional job of meeting targets is that there may have been some misreporting by practitioners. Certain patients may have been omitted from documentation to make it easier to meet targets. To ensure that misreporting is more difficult to get away with, the NHS has established Primary Care Trusts. These Trusts are statutory bodies responsible for the delivery of health care in local areas. They will inspect local practices and perform audits and inspections both randomly and at practices suspected of incorrect or fraudulent returns.

It is highly likely that the pay-for-performance program in the US will have similar results with practitioners performing better than expected in its first year. Doctors, hospitals, and laboratories who pay attention to developing targets from The Centers for Medicare and Medicaid and who make incremental improvements in their practices and facilities before the US adopts a pay-for-performance program in 2007 will put themselves in an excellent position early success. These health care practitioners and facilities will ensure not only that they meet appropriate standards and provide patients with the best possible care, but also that they will reap the maximum benefits and incentives from the government for their meeting targets.

Early Lessons from Provider Pay-for-Performance Program in Britain

Pay-for-Performance programs are not limited to the United States. In 2004, the National Health Service (NHS) of the United Kingdom introduced a pay-for-performance program for family practitioners with much acclaim. A study called Pay for-Performance Programs in Family Practices in the United Kingdom published in the New England Journal of Medicine in July of this year reported findings on the success of the program in its first year.

The National Health Service in the UK committed £1.8 billion ($3.2 billion) in additional funding over a period of three years for the pay-for-performance program for family practitioners. The program would increase practitioners’ income by up to 25%. Incentives were based on practitioners’ performance with respect to 146 indicators covering clinical care for 10 chronic diseases, organization of care, and patient experiences.

It was reported that in the first year of the new pay-for-performance program, 95.5% of practices scored highly, earning them an average of £76,200 ($133,200) each. The pay-for-performance program increased the gross income of the average family practitioner by £23,000 ($40,200), but this was partially offset by the fact that practitioners were responsible for both the nursing and the administrative costs of meeting the targets.

It cannot be denied that the UK pay-for-performance program improved quality of patient care in its first year. Doctors in the UK were awarded a significant bonus and could justify the cost of improving their practices with equipment, training, and additional staff to achieve high quality scores. Unfortunately, this may not be the case with Medicare and Medicaid pay-for-performance programs in the United States.

Federal legislation directed the pay-for-performance model to be adopted in the U.S. by mid-2006. The Centers for Medicare and Medicaid (CMS) will then begin rewarding high-performing doctors, hospitals, health plans, and other providers. Unfortunately, according to another study in the New England Journal of Medicine – Paying for Performance in the United States and Abroad – the U.S. budget will only allow for bonuses of 1 to 2%, while the United Kingdom was able to provide 5 to 10%. These smaller bonuses might not be enough incentive for US physicians to meet high performance standards because the cost of upgrading their practices may eat up the entire bonus.

Already the number of pay-for-performance programs offered by private payers is increasing each year. As grades and rewards are directed to doctors based on their performance, it increases the likelihood is high that they will select labs based on reputation and quality. Furthermore, the CMS may adopt pay-for-performance programs for laboratories that provide them with incentives based on their turnaround time, the accuracy of their results, and other performance factors. Laboratories should be tracking the pay-for-performance trend to understand what indicators are likely to be used to evaluate and reward clinical labs.