“acceptable” cost range;122 and a reduction in the overall growth rate in
Medicaid costs to 2-3% (compared to an average of 6-10% in earlier
years).123 Other favorable results included a decrease in Medicaid cesarean
section rates124 and reductions in wound infection rates (by 87%), all-cause
readmission rates (by 18%), and 90-day post-op complication rates (by
23%) for hip and knee replacements.125
Some of these reported improvements may result merely from
providers’ gaming of the system through tactics such as cutting reported
costs by scrimping on implant materials that may fail subsequent to the time
period for which PAPs are held accountable,126 selective reporting of
adverse events, and declining to perform interventions for patients
perceived as higher-risk.127 Some level of system-gaming may be inevitable
as providers learn the rules of new payment systems.128 Information on this
phenomenon may be ascertainable from comparative statistics on the extent
to which providers attain bonuses and avoid penalties over time.129 How
122. The latter statistic indicates, however, that 40% of providers receiving payments
from the Blues failed to meet these targets. Id. at 2, 4.
123. Id. at 4; Explore Options, supra note 76, at 3B (statement of Ark. Dep’t of Human
Services director John Selig).
124. STATEWIDE TRACKING REPORT, supra note 103, app. B, at 8. C-section rates
declined from 39% in the baseline year to 34% in the performance year. By comparison, the
national Caesarian section rate for 2009-2011 was 31.3%. Michelle J.K. Osterman & Joyce
A. Martin, Changes in Cesarian Delivery Rates by Gestational Age, United States, 1996-
2011 (2013) (Nat’l Ctr. for Health Statistics Data Brief No. 124), available at
125. Id. STATEWIDE TRACKING REPORT, supra note 103, app. B at 11 (Blue Cross/Blue
126. Comment of Frank Griffin, a board-certified orthopedic surgeon in the author’s
Health Policy class.
127. See, e.g., Chernew et al., supra note 7, at 36-37 (physician interview noting
examples of gaming); Elliott S. Fisher, Paying for Performance – Risks and
Recommendations, NEW ENG. J. MED. 1845, 1846 (2006) (noting fear that under pay-for-performance reward structures, physicians “could decide that the easiest way to achieve high
scores is to avoid sick or challenging patients”); Rodney A. Hayward & David M. Kent, 6
EZ Steps to Improving Your Performance (or How to Make P4P Pay 4 U!), 300 J. AM. MED.
ASS’N 255 (2008) (humorous advice on how “to attain and sustain the highest possible
quality score”); Gwyn Bevan & Christopher Hood, What’s Measured Is What Matters:
Targets and Gaming in the English Public Health Care System, 84 PUB. ADMIN. 517 (2006)
(exploring system-gaming theory in the context of U.K. and U.S.S.R. experience); Michael
Kirsch, How the Medical Profession is Being Forced to Game the System, KEVINMD.COM
(May 29, 2013), http://www.kevinmd.com/blog/2013/05/medical-profession-forced-game-
system.html (explaining hospitals’ pressure on physicians to employ tactics such as upcoding
and readmission avoidance “to comply with a punitive financial penalty system that is poorly
disguised as a medical quality initiative”).
128. See Gawande, supra note 92, at 53 (“No one has yet invented a payment system
that cannot be gamed.”).
129. Compare Andy Davis, Health Reward, Payback Lists Out, ARK. DEMOCRAT-
GAZETTE, Feb. 13, 2014, at 1B, 6B (reporting that 49% of doctors treating URI obtained