Physician Pay for Performance

Theory that Outcomes Influence Cost

Physician Pay for Performance (PFP) programs are incentive programs being offered to providers by health plans, coalitions, insurance companies, and employers.  These PFP programs provide additional compensation to physicians who achieve, or make progress toward a defined benchmark or measurement.

 The underlying theory is that as quality increases, the nation's health improves and health care costs decrease.

Two organizations that have evaluated and proposed the guidelines and implementation process for the PFP programs are: 

- American Medical Association (AMA)
- The Centers for Medicare and Medicaid Service (CMS)

In 2006 watch for more Medicare initiatives to encourage improved quality of care in all health care settings where Medicare beneficiaries receive their health care services, including physician offices, ambulatory care facilities, hospitals, nursing homes, home health care agencies and dialysis facilities.

The foundation of effective PFP initiatives is encouraging cooperation with providers and other stakeholders to ensure that there are reasonable and fair standards used. That providers aren’t being pulled in conflicting directions, and that providers have support for achieving improvements.

Consequently, to develop and implement these initiatives, CMS is collaborating with a wide range of other public agencies and private organizations who have a common goal of improving quality and avoiding unnecessary health care costs.  CMS is also providing technical assistance to a wide range of health care providers through its Quality Improvement Organizations (QIOs). Expect more attention on this subject in 2006.