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Study: Paying for Performance No Simple Matter

By Susannah Crepet, CQ Staff

June 29, 2007 -- Good communication between health plans and doctors is critical to ensuring the success of payment for performance programs, a study by Mathematica Policy Research shows. The study, posted on the Web by the journal Health Affairs, focused on a demonstration project that involved seven California Medicaid managed care plans operating in different regions. Five of the plans implemented various new incentives for physicians and other primary care providers, while two did not.

The study examined how well five Medicaid-focused health plans improved the timeliness of well-baby care. The goal was to make sure providers did six well-baby checkups in the first fifteen months of life. Size varied among the plans; the smallest plan had 72 primary care doctors while the largest had more than 2,000. The demonstration project began in 2002.

Only one plan, called "Plan D," was successful in significantly improving its Health Plan Employer Data and Information Set (HEDIS) score for well-baby visits as a direct result of pay-for-performance. Researchers suggested that Plan D succeeded because its new pay-for-performance incentives were an extension of pre-existing incentives. As a result, Plan D's doctors had more to gain financially per child than doctors in other plans. In addition, Plan D's providers were already accustomed to keeping track of well-baby visits, while providers contracted by other plans were largely unprepared to do so.

The relatively small effect pay-for-performance had on the other four plans was in part due to insufficient communication between plans and their providers, researchers said. Some doctors were frustrated by their plans' failure to communicate how the incentives worked, researchers found. Others were unable to interpret the feedback they received from their plans.

Some doctors did not have enough staff members or other resources to support outreach and reminder calls to patients in need of well-baby visits. Other providers worked primarily as walk-in clinics and were not accustomed to scheduling appointments at all, according to researchers. Some providers simply lacked the technology or technical know-how to keep track of their well-baby visits. When they turned to their health plans for patient information, it was often outdated.

Researchers concluded that plans need to take into account the feasibility of implementing pay-for-performance while designing a way to distribute incentives, otherwise providers may not consider participating in pay-for-performance to be an efficient use of their time and resources.

But even if communication between the plans and their providers had been flawless, pay-for-performance incentives might not have had the desired effect on HEDIS measures because of certain characteristics of the targeted population. For example, providers noted that low-income parents need to focus on economic subsistence and as a result often are unable to keep to a visit schedule. Lack of transportation, frequent change of address, and tendency to switch care providers often were other characteristics that thwarted providers' efforts.

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