Medical Pay for Performance (Medicare)


Within the healthcare industry, the term used is “pay for performance” or P4P is also remarked as “value based purchasing”. It is a payment model which provides financial incentives to medical groups, physicians, doctors, hospitals, as well as other healthcare providers in order to meet some specific measures in performance. It is an umbrella term that links the initiatives which are there for enhancing the efficiency and quality of the healthcare regimes. The value proposition similarly gets a much needed boost as well under the aegis of pay for performance in the medical field. The premise of pay for performance within the medical field is associated with the compensation towards measures of work quality as well as goals and objectives. This paper explores the basis of the phenomenon which has come to the fore and is known as ‘pay for performance’. How its role within the medical field has been extracted and made use of, has been duly addressed within the length of the discussion. 

Moving ahead with the debate, purely from a human resource management standpoint, the pay for performance should not be confused or thought in the same vein as the performance related pay. The pay for performance is indeed a salary or a wages paid system in place which is based towards positioning an individual, a team on their pay band which is in line with how well they have performed over a period of time. Within the same topic, it is mandatory to discuss the proposition of the clinical outcomes which include the longer survival as being difficult to estimate and thus measure, which allows for pay for performance systems that get analyzed and evaluated based on their quality and efficiency constructs (Tsouroufli, 2015). This is the reason that the pay for performance model puts a charge on the healthcare providers for medical errors that have been committed, or increased costs as well as poor outcomes within the medical field. From a human resource management perspective, the P4P hits the nail on the head as it outlines the need for creating more avenues for increasing the pay of the employee under question. 

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Delving deep into the pay for performance measures, it is pertinent to note that the professional societies within the United States of America have given their consent to incentive programs. They have however, showed some concerns regarding the validity of the quality indicators, the patient and physician autonomy as well as privacy measures, and lastly the enhanced burdens as far as the administrative measures are concerned. Some preliminary trends and statistics related with pay for performance suggest that such systems relate the compensation construct with the measures of the end goals or even the work quality regimes. The present day healthcare payment methods reward less-safe care, as a few insurance companies might not end up paying for these new practices which shall greatly reduce the errors. Then again, all of this has to be looked into from a human resource management perspective for it to be deemed as a successful proposition. 

Within America, Medicare has a number of pay for performance initiatives which are present within different organizations, offices, hospitals and clinics. These try their levels best to enhance the quality levels and thus avoid the illogical and unwanted healthcare costs which exist. There is room for payments for better care coordination that exist amongst home, the hospitals and the offices for the patients who have chronic diseases. It was in April 2005 that Medicare had its launch for the first ever value based purchasing demonstration project which was a 3-year Medicare Physician Group Practice Demonstration. This project comprised within it the ten huge and multi-specialty physician practices which took care of more than 200,000 Medicare beneficiaries that were bracketed as ‘fee-for-service’. Hence pay for performance within Medicare has generally benefited the entire country by a long mile. There are no cons to speak as much while the pros definitely outnumber any other perspectives that may be present under such scenarios (Dalton, 2017). The pros are therefore doing much justice to the whole debate here. 

The incentive pay for performance plan provides the employees the opportunity to increase their yearly salary which is based on the performance of the company or even performance that has been achieved in an individual capacity. These incentive plans dictate the basis of companies doing their best to motivate their employees as much as possible while extracting the optimum levels from their working domains, which ultimately leads to exponential profit for the company. The pay for performance measures thus look to set the ball rolling in the right direction, which is for the betterment of just about everyone – who is related to the field of medical science. The need is to consider the fact that within healthcare, pay for performance plans look to signal a shift from different entitlements, and is sometimes seen as a very slow process. On the same lines, it can be said that the pay might just alter with some measure of organization, the medical facility, team or even an individual. 

The pros of pay for performance plans are detailed in terms of the special recognition plans, the individual incentives plans, the gainsharing plans, the stock option plans, the cash profit plans and so on. When one questions the basis of these pay for performance plans towards performance results, then it is easy to deduce the fact that variability in the level of pay is introduced, which has a positive effect on the performance (Osterloh, 2014). The advantages of pay for performance plans is envisaged with the positive impact that is there on the organizations, the pragmatism for the individuals, the ease with which performance measures can be developed, teamwork dynamics usually meeting enthusiastic backing from the employees, and the increase in employee participation within the decision making process in healthcare. These are some of the important pros that can be outlined here which suggests that the pay for performance domains are built upon a solid premise and are bringing in the desired results for just about everyone within the field of healthcare. 

Thus it would be correct to state here that the pay for performance measures are there for the well-being of both the organization that falls under the tenet of the healthcare field, and for the employees – who could be the doctors, the physicians, the paramedic staff, the support workers, and so on. If it helps the cause of everyone within this field, then it would be correct to say that the pay for performance philosophy is indeed the best one that is available at the very moment.  

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  1. Dalton, A. (2017). A tale of four practices: A comparative analysis of high and low performing patient-centered medical homes. Journal of Health Organization and Management, 31(6)
  2. Osterloh, M. (2014). Viewpoint: why variable pay for performance in healthcare can backfire: Evidence from psychological economics. Evidence-based HRM: A Global Forum for Empirical Scholarship, 2(1)
  3. Tsouroufli, M. (2015). A medical dilemma: how should physicians respond to patients’ questions about pay? International Perspectives on Equality, Diversity and Inclusion, 2
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