Pay for Performance

Pay for Performance

Since the early 2000’s, the pay for performance healthcare payment system has become a widespread practice amongst providers and health care facilities. Prior to the use of pay for performance, the common practice was fee for service. Under fee for service, providers and facilities received payment for the volume and complexity of their patients. However, studies had shown that there was a lack of quality and efficiency under this payment model. Therefore, there was a push in the health care industry to find a payment model that rewarded providers and facilities on their quality, not quantity. This paper will define pay for performance, talk about reimbursement and the effects of the pay for performance approach, the cost reductions and the impact of quality and efficiency of health care, the effects on healthcare providers and consumers and the effects pay for performance will have on the future of healthcare.

Definition

Pay for performance is a health care payment system in which providers are compensated for meeting pre-established targets for delivery of healthcare services. Implemented by both by the Center for Medicare and Medicaid Services (CMS) and private insurances, pay for performance rewards physicians, hospitals, clinics and other healthcare providers for meeting certain measures of quality and efficiency, (U.S. Department of Health and Human Services, n.d.). For example, providers are paid more when there are fewer errors made. Also, providers are rewarded for making sure their patients meet preventative health care benchmarks such as a primary care physician making sure that his or her patients get their flu shot, physical exams and woman get their annual Pap smears and mammograms. Pay for performance has become popular with The Affordable Care Act plans to implement pay for performance in by experimenting to identify designs and programs that are most effective, (Health Affairs, 2012). There are two main objectives for pay for performance; the first being the increase of the overall quality of care to patients and the encouragement of behavioral changes in providers and facilities to increase efficiency.

Reimbursement and the Effects of the Pay for Performance Approach

In our current health care system, providers and facilities are paid for services performed. This is call fee for service. This gives the provider a financial incentive to perform as many tests and visits as possible. Fee for services, although very lucrative to providers, promotes wasteful uses of recourses for a practice known as defensive medicine. This is when a provider will provide more services than needed to prevent any lawsuits. However, pay for performance reimburses providers and facilities for the quality of care, patient/physician relationship and physician participation.

Pay for performance is structured