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Management Brief No. 136

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Management eBriefs
Issue 136November 2017

The report is a product of the VA/HSR Evidence Synthesis Program.

Pay-for-Performance as Veteran Care Moves into the Community

In pay-for-performance (P4P) programs, a portion of payments to providers, administrators, or healthcare systems is linked to achievement of specific access to care, processes of care, or patient outcome benchmarks. Pay-for-performance is commonly used in the VA healthcare system, and is expected to be an important strategy to incentivize quality and appropriate use as Veteran care moves into the community. Investigators with VA's Evidence-based Synthesis Coordinating Center in Portland, OR sought to identify studies that examined the effects of P4P on the quality of care and health of Veterans in order to identify potential unintended consequences, as well as program design features and implementation factors important to P4P both within the VA healthcare system and in the community. Investigators searched several databases (to March 2017), and from 1,026 studies included 63 articles. In addition, they interviewed 17 key informants with knowledge of the VA system and extensive P4P research or administrative experience.

The effectiveness of pay-for-performance in VA settings has been largely understudied, but investigators highlight a number of key themes that may help guide future P4P improvements in the VA healthcare system.

Pay-for-Performance in Community Settings
A number of themes related to the design and implementation of P4P in community settings also emerged:

  • Initially target areas in need of improvement such as documentation and coordination (i.e., receipt of records from community providers).
    • Overwhelmingly, Key informants (KIs) felt that given known challenges related to receipt of documentation, that data and care coordination may be an appropriate initial area for P4P to target.
  • Develop relationships with providers and health systems with a record of strong performance on commonly used, well-validated, and well-established metrics.
    • KIs stressed the importance of establishing relationships with local providers.
  • The likely small number of Veterans per community provider may pose a challenge, both in terms of accurately assessing quality and the potential for an incentive to influence behavior. Consider beginning with alternate approaches, such as population-based incentives.
    • Several KIs expressed concern about VA's ability to influence provider behavior using P4P, or to accurately estimate quality at the provider level, given that Veterans will compose a small percentage of any one provider's patient population.
  • Use strategies such as public reporting to complement P4P.
    • Consistent with the findings from previous research, KIs stressed that P4P should be just one part of a quality improvement program.
  • Develop tools and resources to streamline the data-sharing and coordination necessary to inform a cross-system P4P program.
    • Similar to findings from included studies, KIs noted ongoing challenges in coordinating care with community providers, and suggested the development of tools to facilitate coordination.
  • Consider how funding expanded care in the community might affect funding for Veterans receiving care in VA settings.
    • KIs voiced both concern for and uncertainty about how the Veterans Choice Program may affect Veterans who continue to receive VA healthcare.
  • Consider how performance by community providers might impact measured performance for VA providers.
    • Several KIs noted that there may be Veterans who receive care both in the community and in VA settings, and voiced concerns about the potential impact on the achievement of VA performance metrics, and possibly on the performance pay of VA providers.
  • Be vigilant for overtreatment and for differences in standards of care (i.e., opioid prescriptions).
    • KIs noted one fundamental difference between VA care and the wider community is that VA tends to be more conservative, and despite evidence of potential overtreatment in VA settings, overtreatment is more common in community settings.
    • Consistent with included research, KIs voiced concern that community providers may be more prone to prescribing opioids than VA providers.

Pay-for-Performance in VA Settings
Several themes related to general issues with P4P in VA emerged from key informant interviews:

  • Regardless of whether performance metrics are incentivized, they should be valid, achievable, and within a provider's control.
    • Consistent with previous findings stressing the importance of evidence-based metrics, key informants (KIs) felt that performance metrics should be valid and well-designed, and cited a need for further research evaluating alternate validation methods.
  • Potential overtreatment and overuse may be an unintended consequence of performance metrics, and de-intensification metrics should be considered.
    • Findings from a handful of included studies, coupled with concerns voiced by KIs suggest that potential overtreatment and overuse may be an unintended consequence of performance metrics, with and without incentives -- particularly in VA facilities that are metric-oriented.
  • Consider re-evaluation of the size (monetary), frequency, and target (provider vs team) of VA performance pay.
    • Consistent with research examining P4P in VA, provider KIs consistently stated that they did not know which metrics were incentivized and did not feel that the current structure influences their behavior. Additionally, despite a study that found otherwise, a number of KIs proposed that VA consider implementing team-based incentives and incentives for other front-line staff.
  • Use a transparent, bottom-up approach for selecting and implementing metrics, and secure provider and staff buy-in. Despite previous research stressing the importance of bottom-up, realistic metrics, VA staff described performance metrics as poorly implemented in VA, and voiced frustration with the current top-down methods.
    • There was strong consensus among KIs that incentivized metrics be achievable, accompanied by local resources necessary for achievement, that decisions regarding what to incentivize are perceived as equitable, and that incentive payments are predictable and reliable.
  • Foster overall and local-level cultures that encourage learning and value quality improvement. Included studies found that metric-driven cultures were more prone to potential overtreatment.
    • Similarly, a KI stated, "We think of the VA as a learning organization, so a pathway is learning to do better and learning to do things that fit with the goals of the VA as an institution. You have to figure out a way of developing the learning organization in all of our facilities. If we improve that, they can be successful."
  • Gaming will likely be mitigated by providing the resources and support necessary for achievement.
    • According to one KI, "Inadequate resources, unrealistic expectations, and the opportunity to cheat all are factors in gaming," and another, "the reason you have things like gaming the system isn't because people don't want to do the right thing, it's because they can't do the right thing."

Despite the fact that performance pay has been a part of VA providers' contracts for more than a decade, very little research has evaluated its effectiveness, and to the investigators' knowledge, no research has explored alternatives. And although Veterans seeking care in the community is not a new phenomenon, continued funding for the Veterans Choice Program necessitates the need for more comprehensive evaluation of the quality of care received by participating Veterans. Current research projects, programs, and initiatives funded largely by VA HSR&D's Quality Enhancement Research Initiative (QUERI) are evaluating metrics, quality, and P4P programs directly within the context of community care, but more research is needed to get a better sense of how expanded care in the community might impact Veterans receiving care in VA settings -- in particular, vulnerable populations such as Veterans of color, low-income Veterans, and Veterans living in rural areas, for whom even community providers may be limited.

Kondo K, Wyse J, Mendelson A, Beard G, Low A, Freeman M, Kansagara D. Challenges and Opportunities for Pay-for-performance as Veteran Care Moves into the Community. VA ESP Project #05-225; 2017.

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ESP is currently soliciting review topics from the broader VA community. Nominations will be accepted electronically using the online Topic Submission Form. If your topic is selected for a synthesis, you will be contacted by an ESP Center to refine the questions and determine a timeline for the report.

This Management e-Brief is provided to inform you about recent HSR&D findings that may be of interest. The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of the Department of Veterans Affairs. If you have any questions or comments about this Brief, please email CIDER. The Center for Information Dissemination and Education Resources (CIDER) is a VA HSR&D Resource Center charged with disseminating important HSR&D findings and information to policy makers, managers, clinicians, and researchers working to improve the health and care of Veterans.


This report is a product of VA/HSR&D's Quality Enhancement Research Initiative's (QUERI) Evidence-Based Synthesis Program (ESP), which was established to provide timely and accurate synthesis of targeted healthcare topics of particular importance to VA managers and policymakers – and to disseminate these reports throughout VA.

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