Monday, April 18, 2005
Carrot or Stick?
Companion articles in the April 4, 2005 issue of Modern Healthcare discuss two methods of using economic incentives to improve health care.
One, headlined “On the bandwagon,” reported that CareFirst Blue Cross and Blue Shield, a Maryland-based non-profit insurer, would be initiating a pay-for-performance plan – “a $3.6 million pilot program that will pay doctors $50 per patient – or up to $100,000 per medical group – if they meet the National Committee for Quality Assurance’s criteria for using information technology to improve safety and standardize care.” The program is being licensed from Bridges to Excellence, an employer coalition formed two years ago to promote quality improvement.
The other, headlined “Poor performance” described a new performance rating program being undertaken by United Health Group, a for-profit insurer, and piloted in 13 states. Under this program “network physicians who are determined by United Health to provide higher quality, lower-cost care than their peers receive stars next to their names on the company’s Web site. The insurer’s three partners in the pilot - General Motors Corp., Daimler Chrysler AG, and United Parcel Service – then push their employees toward the ‘stars’ by demanding higher copayments for using non-designated doctors.”
Pay-for-performance might be described as a carrot in that offers rewards but not penalties. Performance rating is more like a stick since it uses penalties in the form of higher copays to steer patients away from doctors considered to be performing inadequately.
National employers are behind both approaches. No doubt they will all be watching the results carefully to see which works best.
The way economic incentives improve performance is by getting people to change their behavior. In my experience, getting people to change behavior takes a hard push. Gentle nudges don’t do it.
So I’m betting on the stick.
Companion articles in the April 4, 2005 issue of Modern Healthcare discuss two methods of using economic incentives to improve health care.
One, headlined “On the bandwagon,” reported that CareFirst Blue Cross and Blue Shield, a Maryland-based non-profit insurer, would be initiating a pay-for-performance plan – “a $3.6 million pilot program that will pay doctors $50 per patient – or up to $100,000 per medical group – if they meet the National Committee for Quality Assurance’s criteria for using information technology to improve safety and standardize care.” The program is being licensed from Bridges to Excellence, an employer coalition formed two years ago to promote quality improvement.
The other, headlined “Poor performance” described a new performance rating program being undertaken by United Health Group, a for-profit insurer, and piloted in 13 states. Under this program “network physicians who are determined by United Health to provide higher quality, lower-cost care than their peers receive stars next to their names on the company’s Web site. The insurer’s three partners in the pilot - General Motors Corp., Daimler Chrysler AG, and United Parcel Service – then push their employees toward the ‘stars’ by demanding higher copayments for using non-designated doctors.”
Pay-for-performance might be described as a carrot in that offers rewards but not penalties. Performance rating is more like a stick since it uses penalties in the form of higher copays to steer patients away from doctors considered to be performing inadequately.
National employers are behind both approaches. No doubt they will all be watching the results carefully to see which works best.
The way economic incentives improve performance is by getting people to change their behavior. In my experience, getting people to change behavior takes a hard push. Gentle nudges don’t do it.
So I’m betting on the stick.
