Can Medicare learn from HMO pay-for-performance programs?

January 1, 2007

Information about how well pay-for-performance programs are doing within commercial HMOs might help the Centers for Medicare and Medicaid Services, which is considering adopting this approach for Medicare reimbursement. To that end, Boston researchers conducted a survey of 252 HMOs from 41 metropolitan areas across the country to identify the traits of these incentive programs.

Information about how well pay-for-performance programs are doing within commercial HMOs might help the Centers for Medicare and Medicaid Services, which is considering adopting this approach for Medicare reimbursement. To that end, Boston researchers conducted a survey of 252 HMOs from 41 metropolitan areas across the country to identify the traits of these incentive programs.

The researchers concluded that CMS would face some difficulties in creating a pay-for-performance program that would compare to those of commercial HMOs (New England Journal of Medicine, 11/2/2006). First, the researchers found that HMOs that don't require enrollees to select a primary-care physician as a gatekeeper (a design shared by Medicare) were less likely to implement incentive plans-perhaps because of the difficulty of attributing performance to a single doctor or group. If CMS decides to implement an incentive program, it will need to create strategies to overcome the current design. Second, commercial approaches to incentive programs are generally focused on medical groups rather than individual physicians-a feature that cannot be exploited under Medicare's current design. Finally, plans offer rewards greater than 5% of payments-an issue that CMS may not be able to compete with given its financial constraints.