Pay-for-performance: Right rules reward quality

New AMA guidelines aim to make sure such programs keep their focus on patient care.

Editorial. April 11, 2005.

Pay-for-performance seems to be all the rage these days. Medicare is testing it out. Some congressional lawmakers are interested in the concept. More and more private health plans and business coalitions are expected to give it a try this year.

These initiatives, which give physicians financial incentives to improve performance, hold the potential to do great good. If done properly, they can enhance the quality of care and patient safety. But if done poorly, they actually hurt patient care and damage the patient-physician relationship.

Already some efforts are raising red flags. One example is UnitedHealthcare's new tiered physician network program, which shares many commonalities with pay-for-performance. It encourages patients to see physicians the insurer deems to be cost efficient and high quality by charging more to see doctors who aren't on that list.

The problem, according to several medical societies, including the American Medical Association, is that the system is really based on cost, not quality.

So physicians have good reason to give a deep, hard look at any initiative purported to enhance performance. They must be able to weigh in knowledgeably on the budding trend if it sprouts in their communities and make an educated decision about whether to participate personally.

Now they have a tool to help. In March, the AMA unveiled new principles and guidelines that the Association and doctors can use to evaluate whether a pay-for-performance program is fair and ethical.