02 September 2008

Why bother participating in P4P?

Kevin, MD wrote about Medicare's "dismal" pay for performance in a recent post. While I don't disagree with Kevin's point that the minuscule payments are barely worth is as things stand, I think that Kevin may be missing or eliding the real point of P4P and where it is going.

First, understand that the program, technically known as PQRI, Physician Quality Reporting Initiative, is not actually pay for performance. It's pay for reporting, as Medicare road-tests its data collection capabilities. In order to qualify for the payment, you only have to report your data on a certain fraction of patients on a limited number of performance metrics. For example, in EM, there are (IIRC) eleven metrics we could choose to report on, and you only need report on five of your choice. If you report data for 80% of eligible patients in each of those five categories, you get paid. It is important to understand that you don't need to be doing a good job in those categories, you just need to capture the data.

Second, the payment is tiny. For a large practice with a typical payer mix and $10 million in gross revenue, the PQRI initiative might be worth $15,000. Not to scoff at five figures, but that's a rounding error in an eight-figure budget. So why bother?

Well, there's no good reason to, right now, and this program is not really targeted at small practices or billing companies. The intention here is to bring the big institutional players on board. If you consider a big biller in EM, or any other field for that matter, with say 4 million patient encounters, maybe a third of which are medicare, and an average charge of $100 per visit -- and now you're looking at $2 million in "incentive" to develop the capacity to seamlessly capture the P4P data. That's enough cash that most large organizations (already paranoid about compliance) will find it "worth it" to buy into P4P. That done, CMS can test the system, refine and expend the metrics, and -- here's the crucial part -- increase the amount of money at stake.

And don't misunderstand -- while now there is an incentive, a bonus payment, for those who choose to participate, soon there will be bonuses for those who participate and perform to par on the metrics, and penalties for those who do not perform well, and larger penalties for those who do not bother to report.

So why should the typical small practice participate now? No reason, other than the prepare yourself for the onslaught of more and more metrics with more and more value attached to them which are coming down the track like a runaway locomotive. I don't know -- the amounts may never be significant to small independent practitioners. They can opt out of Medicare, or they can take the hit and never notice the lost revenue. But for large practices, or for institutional clients, if Medicare follows through on its threat and puts real dollars at stake, then you had damn well better be ready to report compliantly and completely or eat it big time.

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