Impact of a pay-for-performance intervention: financial analysis of a pilot program implementation and implications for ophthalmology (an American Ophthalmological Society thesis)

• Published in: Transactions of the American Ophthalmological Society Vol. 105; pp. 448 - 460
• Main Author: Parke, 2nd, David W
• Format: Journal Article
• Language: English
• Published: United States The American Ophthalmological Society 2007
• Subjects: Cost Control; Cost Savings; Fees and Charges; Health Benefit Plans, Employee; Humans; Ophthalmology - economics; Outcome and Process Assessment (Health Care); Pilot Projects; Reimbursement Mechanisms; Societies, Medical; United States; United States
• ISSN: 0065-9533; 1545-6110

To determine whether a specific pay-for-performance program design will result in a decrease in global health care expenditures attributable to implementation of that program. A retrospective analysis was performed of costs referable to the health plan during a baseline year in comparison to the year following the program implementation. All claims paid during the year prior to program implementation (Baseline) were compared with all costs during the first year of program deployment (Intervention). The primary outcome measure was global health plan expenditure. Secondary outcomes measures included global health plan expenditures adjusted for catastrophic cases and changes in costs by provider type attributable to the program implementation. Global expenditures, for Implementation relative to Baseline years, decreased to $2,049,780 from $2,316,929 (11.5%). When adjustment was made for catastrophic cases, costs decreased to $1,645,568 from $1,811,840 (9.2%). This cost reduction was achieved despite approximately a 10% increase in provider pricing per unit of service. In this pilot, implementing the program was an effective way to reduce the total health care costs in the first year of implementation. This supports the concept and documents for the first time in a commercial population that an appropriately designed pay-for-performance system can reduce total health care costs by reduction in units of service. This reduction in units of service will more than offset a substantive increase in physician payment per unit of service. Pay-for-performance measures will impact the practice of ophthalmology as government, payers, employers, and consumers focus on value and on demonstrable, auditable outcomes of the care process.