We found a significant association between the SES of the census tracts in which POs are located and their performance in IHA’s P4P program. This association was robust across three different methods for defining the areas in which a PO is located, and at a variety of cut-points for awarding bonuses in P4P programs.
To our knowledge this is the first study to show that an area-based SES measure is associated with P4P performance for large medical groups and independent practice associations; its impact on hospital P4P has been demonstrated recently.9
This finding may be of particular interest to rank-and-file physicians because they will be increasingly subject to performance incentives as a part of how they are reimbursed for their work. Tying rewards or sanctions to healthcare quality through pay-for-performance or public reporting programs remains a core strategy in healthcare reform efforts; these incentives are featured prominently in the Patient Protection and Affordable Care Act (ACA) and will be relied upon to counterbalance incentives aimed primarily at controlling costs.1
While early experience suggests that performance incentives may improve care quality, there are concerns that these programs may also inadvertently penalize providers serving more disadvantaged populations and thus potentially widen disparities in the quality of care.5,10,40–45
This finding is also of interest because it suggests that the healthcare “neighborhood” may matter even for the large organizations included in the IHA P4P program—large medical groups and IPAs thought to constitute an important foundation upon which the accountable care organizations featured in health care reform can be built.46–48
We found a significant association between the SES of the areas in which a PO is located and the PO’s performance on quality metrics in both bivariate and multivariate analyses. From an immediate policy point-of-view, the bivariate result—which shows a somewhat larger “effect” of SES—is most relevant because this is the manner in which payments are dispersed. If policymakers are concerned that their P4P program may be increasing resource gaps between POs in higher and lower SES areas, they first need to know whether POs in lower SES areas have lower performance scores, regardless of their other characteristics. The bivariate analysis provides this information. The multivariate analysis illustrates the strength of this relationship after accounting for other important explanatory factors.
Our study has six main limitations. First, the POs in the IHA program are quite large; it is possible that the association between performance and area-based SES is different for small physician practices. Second, IHA’s P4P program operates in only California, which differs from most of the U.S. in that it has a large number of large medical groups and IPAs, more capitation and more delegation of utilization management from health plans to POs; findings in this setting may or may not be generalizable to other parts of the country. Third, our analysis does not include detailed information about individual patients or about specific resources in the areas being served by POs. A multi-level analysis—one that includes patient-level, PO-level, and area-level variables—would be needed in order to better determine the relative contribution of each factor. Fourth, we had to exclude 59 of the 219 eligible POs. Excluded POs served more Medicaid patients and performed less well in the P4P program. If we had been able to include these POs, it is likely that the finding of an association between the area-based PO SES measure and performance would have been even stronger. Fifth, although IHA’s program represents a prevailing approach to P4P program design, alternative tactics (e.g., those attempting to reward incremental improvements rather than all-or-nothing achievement) may yield different results.49,50
Sixth, P4P may have a different effect if achievement levels are set lower versus higher—although in our study results did not change at a variety of achievement levels.
Our data do not address the mechanisms by which POs in lower SES areas score lower on IHA’s performance measure. It is possible that these POs deliver poorer quality care, and/or that it is more difficult for POs in low SES areas to score well, even when they deliver high quality care, for the reasons discussed in the introduction to this article. Regardless of the mechanism, P4P programs that fail to account for the SES of the areas in which providers are located risk increasing resource gaps between providers in high versus low SES areas, and thus increasing disparities in health care delivery.
Public and private payers may want to consider alternative designs for P4P programs to make them less likely to increase disparities, and medical groups and IPAs may want to encourage these alternative designs. One approach would be to adjust for the SES of the areas a PO serves through risk adjustment or by placing POs into strata based on their SES score and paying P4P bonuses based on comparisons within the same stratum.5
Further work is needed to better understand how alternative incentive strategies may affect providers or which structural features are important for POs aiming to improve quality while being located in lower SES settings.17,50
Another option would be to design P4P programs to de-emphasize absolute thresholds (i.e., only paying providers for reaching a certain level of performance) and tournaments (where providers earn rewards for scoring higher than their competitors), and emphasize rates of relative improvement.49,51,52
In fact, in 2009, IHA suggested a methodology that gives performance attainment and relative improvement more equal weighting; since then, three of the seven participating health plans have adopted this recommendation. This strategy would not eliminate the possibility that P4P programs would increase disparities, but could mitigate it.
In summary, this paper supports the hypothesis that the SES of the locations in which a medical group or IPA’s physicians care for patients is likely to be associated with how well the PO performs in P4P programs. The strengths of this paper include the diversity of POs with respect to their area-based SES, and the use of well-established methodologies for defining area SES and for measuring P4P performance. As policymakers and researchers devote increasing attention to the reasons why POs in lower SES areas have lower scores on P4P quality measures, and to ways of redesigning P4P programs, it may be possible to reduce, or at least not increase, disparities in health care delivery between richer and poorer areas. Physicians will want to learn how some POs located in low SES areas are nevertheless able to provide high quality care, as four POs were able to do in our study. Future studies should evaluate the relative contributions of patient-, practice-, and area-level factors when assessing healthcare performance.