BOX 5-2

Example of Units of Analysis in the Ambulatory Setting

Physician offices differ from other settings in part because of issues of sample size. The literature has shown that for measures to represent adequately how well providers are performing, on average 25 cases are needed (personal communication, G. Pawlson, August 3, 2006). Since the committee argues that rewards should be linked directly to how well providers perform based on a composite score for a specific condition (see Chapter 4), a physician would have to see a minimum of 25 patients per condition, referred to as cases, to be eligible for rewards. However, a single primary care physician may not see 25 or more asthmatics or diabetics, and a physician who did not have a sufficient number of cases would not qualify for rewards for that condition. This issue also raises the question of whether rewards will be large enough to be financially meaningful to providers. To address these issues, the committee examined three alternatives for providing rewards at the physician office level.

Option 1: Individual Physicians. Under this option, individual physicians with sufficient numbers of cases would be eligible for rewards associated with performance. The care attributable to each physician would be known and could therefore be rewarded appropriately. Because care would be attributable to individual physicians, a shared sense of responsibility could result from this option. However, many physicians do not see enough patients for measures to be reliable, and it is difficult to estimate resource use. Moreover, rewards may be too small under this option for physicians to seriously consider participating in pay for performance. This option also poses the technical problem of attributing patients to physicians (Pham, 2006).

health outcomes. One way to address this problem is to provide direct and indirect incentives for care coordination. To the extent that pay for performance rewards specific providers for performing at a desired level and care coordination contributes to high-quality care, pay for performance should indirectly encourage better care coordination. Nonetheless, the fragmented nature of care, the increased specialization among professionals, and the inherent difficulty of assigning responsibility for health outcomes may mean that more direct incentives are needed to generate the optimal amount of coordination. To this end, the committee recommends that Medicare encourage beneficiaries and their providers to identify a responsible or accountable source of care. This accountable source of care could take various forms, including (1) the beneficiary’s predominant caregiver (e.g., a primary care doctor, a specialist treating a chronic condition), who would agree to be responsible for the coordination of all of the beneficiary’s care;



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