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Will Pay-for-Performance Techniques Help Control Expenses?

March 11, 2014

Pay-for-PerformanceThe medical provider community is not enamored with the “pay-for-performance” (P4P) initiatives now dominating the payer landscape. Incentive-laden payment schedules dramatically contrast with classic fee-for-service (FFS) payment systems.

Depending on the components used, P4P systems can take various forms. However, regardless of the elements considered by payers, the medical community continues to favor FFS, as it compensates for the quality of services rendered without evaluation of performance.

Medical professionals have multiple concerns with performance-based measurement systems. Often, the primary questions and issues involve two concerns.

  • Will P4P systems help or hurt controlling expenses?
  • Can I maintain current revenue or increase income with P4P payer techniques, in light of healthcare reform, new ICD-10 coding and documentation requirement increases?

Understanding Pay-for-Performance Logistics

The first requirement is to understand the foundation and goal of P4P systems. The goals of P4P systems is rather straightforward: Define incentive rewards for physicians and other medical providers for improving health care for patients.

The measurement details and standards payers use is much more complex and argumentative. This is the primary area of contention, with no consensus among the medical or payer community as yet. The depth and breadth of performance measurement benchmarks, often stated as the “clinical outcomes” of diagnosis and treatment choices, has generated heavy discussion and, sometimes, strong disagreement.

According to leading research institute, RTI International, many payers use the following factors as the foundation for P4P logistics when designing systems.

  • Clinical outcomes.
  • Clinical process quality.
  • Patient safety.
  • Access to and deliverance of quality care.
  • Patient satisfaction levels.
  • Cost of care efficiency.
  • Adoption of and adherence to an “evidence-based” practice.
  • Proper use of information technology.

This list is not all-inclusive, as some payers use performance standards with more measurement factors. Unfortunately, to date there is little agreement on P4P design details or the projected results.

Expense Control

P4P and evidence-based medical practice almost mandate that physicians cut or, at least, tightly control costs. Since payers often use cost-efficiency as a critical P4P component, practitioners’ data may be compared to other providers’ efficiency as a measurement tool.

While this incentive standard works “on paper,” there is medical community concern how it will impact P4P results in the real world. Depending on the payer benchmarks used, the cost-control requirement will have an impact on most practice ratings.

Even if a P4P system is committed to fair and equitable evaluation, will practice personnel understand the necessary expense limitations placed on physicians and practice managers? Maybe, the best way to exercise expense control is to outsource many functions to a top practice management firm, such as M-Scribe Technologies, to handle billing, coding, documentation, etc. This solution gives practices cost-certain control with managing patient- and service delivery-related expenses.

Revenue Maintenance and/or Improvement

The healthcare reforms, new ICD-10 codes and increased documentation requirements are strong challenges to maintaining or improving practice revenue levels. The medical community’s concerns appear to be well-founded.

P4P, although touted as an incentive program, can deliver hidden (or not-so-hidden) penalties to medical providers by reducing, not increasing, revenue. Until a consensus is reached regarding standards and measurement techniques, medical providers will continue to debate the merits and detriments of P4P.

The “learning curve” associated with massive reforms, coding and unfamiliar documentation requirements temporarily could generate revenue challenges that practitioners cannot overcome. Should this occur, providers dedicate all efforts to master these necessities as soon as possible to restore former revenue levels.

Once again, it appears wise for providers and practice managers to consider outsourcing functions to top, proven, professional third-party firms to safeguard revenue. Their staffs have been thoroughly trained in billing, coding and documentation changes needing mastery to keep revenue flowing strongly.

Avoiding claim delays and denials with accurate billing, coding and documentation submission is vital with or without P4P systems. Until the longer term results take place, medical providers probably will continue asking if pay-for-performance techniques will help or hurt cost control and revenue levels? Can you blame them?

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