P4P Payment Model

Quality Topic
The Pay-for-Performance (P4P) Payment Model
Quality Topic Description
Description: The P4P is a payment model, which offers financial incentives to health care providers for meeting specific performances measures. Medical care providers receive Medicare reimbursements that reflect the provider’s performance on specific metrics, which are based on adherence to expected health care processes, patient satisfaction survey (PSS) scores, or patient quality outcomes (Nix, 2013). Miller, et al. (2017) referred to it as a “modified FFS (fee-for-service)” method. Evidently, this model acts as a payment template for many of Medicare’s programs. These programs include the Premier Hospital Quality Incentive (PHQI), the Hospital-Acquired Condition

the HAC program and the HVBP program) (Rajaram, Barnard, & Bilimoria, 2015).
Origins: The emergence of the P4P model resulted from a real problem in the American healthcare payment system wherein payments for medical care delivery, particularly in large state and federal health programs, were perceived to have failed reflecting value or health benefit for the patients due to a seriously flawed payment system (Nix, 2013). Evidently, for long years, the patients had been dissatisfied for the lack of value received in their health care access.
Since 2004, and evidently even earlier, the United States consistently fell behind 10 other developed countries in three continents, such as Australia in Oceania; Canada in North America; and France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom in Europe (Baird, 2016). In fact, it has the global highest mortality rate for women due to pregnancy and childbirth complications; the highest likelihood for children to die before reaching age 5; the second highest mortality rates for coronary heart disease (CHD) and lung disease (Baird,

This model pays providers on the basis of quantity of services provided with limited accountability for quality outcomes or care delivery efficiency. Consequently, it provides clear incentives for providers to order the performance of more laboratory tests and services without clear and evident improvement on patient outcomes, increasing instead the cost of health care. In response, CMS rolled out its first and pilot P4P program, called the (PHQI) program, in 2003 (Baird, 2016). Thereafter, it tested the limits of the P4P model with new programs for different health care providers.
To further expand the P4P programs, the 111th Congress enacted the Patient Protection and Affordable Care Act of 2010 (PPACA 2010), which came to be known popularly as ‘Obamacare’ (Nix, 2013) and shortened as Affordable Care Act (ACA), and mandated CMS to design a hospital value-based purchasing (HVBP) program that will link Medicare payments to health care provider quality outcomes (Baird, 2016). It also encouraged Medicare experimentation in ascertaining each P4P program’s