According to a new study commissioned by the Department of Health and Human Services, Agency for Healthcare Research and Quality, more than half of the nation's HMOs used pay-for-performance programs in their contracts with doctors and hospitals in 2005.
The study, titled Pay-for-Performance in Commercial HMOs, was conducted by the Harvard School of Public Health and Harvard Medical School and was published in the Nov. 2 issue of the New England Journal of Medicine.
It found that nearly 90% of the 242 HMOs surveyed used pay-for-performance as part of their physician compensation and more than 30% included pay-for-performance in their hospital contracts.
"This study is the first to assess the prevalence of pay-for-performance programs among HMOs and describe how they are used among physicians and hospitals," said AHRQ Director Carolyn M. Clancy, M.D. "The findings are exceedingly valuable and come at a time when the federal government is beginning to develop a value-based hospital payment system for Medicare enrollees," Clancy said.
According to AHRQ, pay-for-performance arrangements are an increasingly popular way for payers to reward doctors and hospitals for adhering to evidence-based standards of clinical care.
The federal government will be looking at ways to incorporate pay-for-performance into traditional Medicare by 2009, researchers said.
The study surveyed health plans that offered commercial HMO products in 41 U.S. markets with at least 100,000 HMO enrollees. The markets in the sample represented 91% percent of U.S. HMO enrollees and 78 percent of the U.S. metropolitan population.
Measures promoted by The Leapfrog Group, a quality improvement organization, were used in the study, and included intensive care unit staffing, use of computerized physician order entry systems, and volume standards for high-risk procedures.
"Leapfrog is excited to see as much pay-for-performance as this study found, but it is only a first step," said Catherine Eikel, director of programs at the The Leapfrog Group. "We see this as a good movement forward, but a lot more can be done to align incentives to quality."
Currently, The Leapfrog Group is engaged in "active conversations" with the Centers for Medicare & Medicaid Services as it considers pay-for-performance standards, Eikel said.
In another look at the pay-for-performance issue, a report released Sept. 21 by the Institute of Medicine called for HHS to gradually replace the current Medicare fee-for-service system with pay-for-performance. The current system does little to promote improvements in quality of care for Medicare's 42 million beneficiaries, IOM said.