9/1/14	UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
		Chapter 3 -- Payments to Providers
PROBLEM 1: PLEASE SHOW WORK:
Sunnyvale Primary Care (SPC) is considering a P4P program to increase preventative care for its
diabetic patients. HbA1c is a blood test used to determine how well diabetes is being controlled. The
state medical association recommends that diabetic patients have this test a minimum of two times per
year. In addition, because patients regularly enter and leave primary care practices, the association
considers that a level of 90 percent of diabetic patients having a HbA1c test two times per year is a
reasonable goal for most primary care practices. In the state where SPC is located, currently only 80
percent of diabetic patients actually have a HbA1c test two or more times per year.
SPC decided on HbA1c as a process measure for its P4P program and is now considering three
methods of allocating rewards. For each of the measures below, a physician receives a $5,000 bonus if:
- the percent of their diabetic patients that had at least two HbA1c tests in the past year is greater
than the state average of 80 percent (relative performance).
- the percent of their diabetic patients that had at least two HbA1c tests in the past year is greater
than the state goal of 90 percent (benchmark performance).
- the difference in the percent of their diabetic patients that had at least two HbA1c tests in the past year
compared to the previous year is greater than 10 percent (improvement performance).
The percent of diabetic patients that had at least two HbA1c tests in the past year for each SPC physician
is shown below:
Physician	Jan-Jun	Jul-Dec
A	60%	76%
B	70%	81%
C	80%	81%
D	90%	91%
a) For the Jul-Dec period, what would be each physician's P4P if rewards were allocated based on
relative, benchmark, and improvement performance?
b) Which method(s) of allocating rewards would you recommend?