After completing four years of medical school and three to eight years of rigorous specialty training, your doctor will soon have to get a report card from the federal government. Oh, and his or her income will be determined by this report card, not by years of training or patient satisfaction. This new rating is mandated in the new federal health care law, the Affordable Care Act.
Formally known as pay-for-performance, or P4P, the idea of grading doctors has been around for thirty years. It began in the 1980s with health maintenance organizations and then languished until a few years ago. The fundamental premise of mandatory grading is doctors are greedy and will order extra tests and procedures just to increase their incomes, even though there is ostensibly no patient benefit.
Consequently, the government will set standards for treatment and will only pay doctors based on how closely they follow government directions. A corollary is that some of the things providers do to patients are harmful and the providers should not be paid when patients develop complications later.
The problem, as the government sees it, is that the current fee-for-service payment system is flawed and incentives doctors to provide too much care which in turn increases overall health care costs. Government central planners believe they can force doctors to follow a “cookbook” method of ordering tests and procedures, and that this will decrease costs and also provide better quality of care.
Private insurers are strongly encouraging P4P. There were 52 P4P programs in the United States in 2003. By 2007, there were 256, some of them Medicare pilot programs.
Results have been mixed. There is no consistent evidence that P4P results in better quality of care for patients or in cost savings. Research does show that doctors will adapt and will follow treatment guidelines, especially when administrators threaten to cut reimbursements. Just following guidelines, however, does not equate to better patient outcomes. Research also shows that providers are more inclined to use preventive care measures under a P4P system. However, except in isolated cases, there is limited evidence these preventive treatments improve overall health outcomes.
The Affordable Care Act relies heavily on mandatory P4Ps to try and force down costs. Ultimately Medicare and Medicaid will broadly use restrictive P4Ps.
Medicine is as much an art as a science. Unlike building a car or repairing a machine, each patient is an individual and cannot (and should not) be treated by “cookbook” methods. Likewise it is often impossible to predict which patients will have complications, although obviously sicker patients are at higher risk. If doctors are forced to accept P4P, many providers may seek to reduce their exposure by refusing to see very sick people. The very patients who need to see a doctor most may have a hard time finding one.
The basic problem with the cost of our health care system is not the traditional fee-for-service payment method. The fundamental problem is that patients have no idea of the cost of the care they receive. Someone else, either a government agency or our employers, pays almost 90 percent of the cost of health care in the United States. It is an economic law that over-utilization and misuse will occur when a disinterested third party pays for something we receive. The solution to this problem is not centrally-planned P4P. The solution is to give patients control over their health care dollars, allow them to become true consumers of health care, and allow people to make their own health care decisions.
Dr. Roger Stark is a retired physician and a health care policy analyst with Washington Policy Center, a non-partisan independent policy research organization in Washington state. For more information visit washingtonpolicy.org.