Pay for Performance (P4P) in Medical Imaging: The Time Has (Finally) Come

Abstract

In life, there tends to be two (somewhat simplistic) views on payment. The first (and more common) is that services rendered generate a fixed payment. It does not matter whether you take the perspective of the employer, employee, or customer. All three parties know up-front what they are expecting and willing to pay (and receive), based upon a mutually agreeable compensation schedule. In the workplace, employers and employees will periodically review this compensation schedule and make systematic adjustments based on market conditions. Although this commonly follows an upwards trajectory (i.e., progressively increasing salaries), this is not always the case as evidenced by the recent decline in compensation benefits within the airline industry. When salary increases do occur, they are frequently passed on to the customers, often creating inflationary pressures within the marketplace. This has certainly been the case throughout the health care industry, where prices for goods and services have continuously trended upwards, often irrespective of the quality and timeliness of these services. Recent estimates by the Centers for Medicare and Medicaid Services (CMS) predict national health care expenditures to grow 2.5% faster than the gross domestic product (GDP), with the percentage of GDP spent on health services predicted to grow from its current rate of 15% to 17% in 2011.1 This figure is almost twice as high as comparable health care expenditures in the United Kingdom and is projected to exhaust the Medicare hospital trust fund by 2019.2 The second (and less common) school of thought on payment is one which is incentive-based, tying payment to performance. This “sliding scale” approach is often met with skepticism, largely out of concerns over how (and by whom) the payment will be calculated. If a supplier of goods and services was to defer to the customer on determining “fair and equitable” compensation, the recommended figure would in all likelihood be less than the “standard market rate”. If, on the other hand, the consumer of these goods and services was to appropriate pricing to the provider, an equal degree of disparity will emerge. In the end, determining “fair and equitable” pricing becomes highly subjective, especially when objective comparison data is in such short supply. On face value, this pay-for-performance (P4P) pricing model becomes too subjective and uncertain to gain wide acceptance. But does that necessarily have to be the case?