Article Title

Value of Physician Performance in Diabetes System of Care Among Elderly Medicare Patients: Implications for Pay-for-Performance

Publication Date



financial analysis, primary care, diabetes, health care costs/resource use


Background: While pay-for-performance for physicians is appealing, a direct translation of quality performance into physician payment remains challenging. This study seeks to quantify in dollar terms the value of incremental improvements in Geisinger’s diabetes system of care (DSC) –– ie, an all-or-none “bundle” of 9 diabetes-related performance measures consisting of the following elements: A1C measurement and control; low-density lipoprotein measurement and control; blood pressure measurement; urine protein testing; influenza immunization; pneumococcal immunization; and smoking cessation. Since 2006, Geisinger’s primary care physicians (PCPs) have been evaluated and compensated based on their DSC performance.

Methods: This study focused on Medicare Advantage members attributed to Geisinger Clinic’s PCPs between January 1, 2006, and September 30, 2014. Claims data were obtained for the subset of the DSC-eligible patients who were Geisinger Health Plan Medicare Advantage members. The key explanatory variable was the DSC performance of the PCP responsible for each patient in the sample, measured as percentages of the PCP’s patients meeting all 9 bundle elements. The association between this explanatory variable and per-member-per-month (PMPM) allowed amount was examined using a multivariate regression model.

Results: The results indicate 1-point improvement in the percentage of diabetes patients attributed to a same PCP. Meeting all the DSC elements in a given year –– ie, DSC bundle score –– was associated with approximately $4 PMPM (in 2006 dollars; P < 0.05) reduction in total medical cost (excluding prescription drugs) incurred in the same year, driven mainly by reductions in inpatient cost. Moreover, there is variation in how much each DSC element contributes to the cost reduction; among the 9 elements, urine protein testing and blood pressure measurements were most consistently associated with lower total medical costs.

Conclusion: These findings suggest the DSC may be useful in establishing a feasible pay-for-performance scheme that incentivizes PCPs to improve diabetes care quality.