Health Care Payment Reform

Writing in a web-first article in  Health Affairs, Dr. Robert Wachter,  professor and associate chair of the Department of Medicine at the University of California, San Francisco, reviews the past decade of patient safety and gives it a B- score.

In updating a five-year review, Wachter examines the role of health care payment in promoting patient safety:

The “no pay for errors” policy, launched in 2008, has increased hospitals’ focus on preventing certain adverse events (despite relatively trivial payment cuts to date). However, concerns have beenraised about fairness (particularly since many of the events on the list are not known to be substantially preventable)  and unintended consequences (such as keeping hospitalized elderly patients in bed in a misguided effort to prevent falls).

For now, I give this category a C+, with some points awarded to Medicare’s new policy for being a clever way to begin reshaping the reimbursement system to promote patient safety.

A new payment system that would reward hospitals based on the quality of care they deliver would apparently shock hospital board leaders. According to a report on the Wall Street Journal’s Health Blog, a new Health Affairs survey finds virtually all board chairmen believe their hospital is at least average:

Ninety-nine percent of hospital board chairmen think their hospital fares at least as well as a typical hospital on standard quality measures. Among the chairmen of hospitals that perform worst, 100% say their hospital performs at least as well as a typical hospital.

With this kind of leadership, it’s no wonder the quality of hospital care in America is so unreliable.

All eyes on Massachusetts, please! That state has already gone where the rest of the country is headed, so look there for lessons borne of experience.

The New England Journal of Medicine (online only) reports on a poll of Massachusetts physicians regarding their perspectives on the state’s 2006 health care reform legislation.  The main result of the legislation is increased insurance coverage; state legislators are currently trying to figure out how to control the  higher costs associated with that achievement.

Important findings: 70 percent of physicians support the 2006 legislation.  Almost half (46 percent) want to see additional changes; of those who want additional changes, expanding coverage (34 percent)  is the most frequently cited priority, followed by addressing costs (23 percent) and increasing reimbursement (13 percent).

I was encouraged to see that 37 percent of physicians believe the law has improved the quality of care provided in MA, while only 12 percent feel that quality has declined.

Lead author for the article–full text is available free–is Gillian Steel from Harvard School of Public Health. She and her co-authors write:

Massachusetts has the lowest proportion of uninsured residents in the United States. Our results show that there is widespread support among Bay State physicians for the law that led to this high level of coverage. At the same time, physicians believe that it has contributed to some problems with health care in the state.

Examination of physicians’ views on care for their patients provides little evidence to support criticisms that the law is negatively affecting the quality of care that most physicians deliver. With regard to their own practices, a sizable minority of physicians indicate that the legislation has increased their administrative burden.

Physicians’ views concerning the effect of the law on the state’s health care environment are more mixed. Most believe it is helping the formerly uninsured, but that positive view is coupled with a majority belief that the program is driving up the cost of health care in the state. In addition, physicians are divided about whether it has imposed pressures on the state’s primary care capacity.

Taken together, these findings suggest that it is possible both to provide near-universal coverage of the population and to have a system that most physicians believe improves care for the uninsured without undermining their ability to provide care to their patients. At the same time, the Massachusetts experience provides evidence of trade-offs in other areas of the health care system, including rising health care costs and, for some patients, challenges in obtaining access to primary care.

Bob Wachter’s post on incident reports about medical errors and near-misses would be a funny unintended-consequences story if the health care industry could afford to waste money and time on patient safety.

When I visit hospitals to talk about patient safety, they often show me their IR reporting trends. If the number of IRs has gone up over the past year, they breathlessly proclaim, “This is great. We’ve succeeded in creating a reporting culture – the front line personnel believe that we take errors seriously. We’re getting safer!”

That would sound more credible if hospitals with downward trends didn’t invariably shout, “This is great, we have fewer errors! Our efforts are paying off!”

Are hospitalists a part of the solution to the problems caused by America’s fragmented health care system? Bob Wachter thinks so, and I think he might be on to something.

Wachter, chief of the division of hospital medicine at University of California-San Francisco, says:

…since hospitals are the target of most robust quality reporting, pay-for-performance, and patient safety mandates, hospitalists share their worldview on these issues as well. If I’m getting money from my hospital, I damn well better help the hospital achieve excellent performance on publicly reported hospital quality data, “no pay for errors”, Joint Commission National Patient Safety goals, patient satisfaction scores, readmission rates, and the other scary things that keep my hospital CMO up at night.

In other words, well-organized hospitalist programs share their hospital’s accountabilities.

I wonder if hospitalists, generally speaking, are in leadership positions in which they can maximize the shared accountabilities that lead to better quality and lower cost care. Your thoughts, please?

Medicare’s never-event policy was a good way of announcing CMS’ intent to pay for value, but the more scrutiny it gets, the more difficult it is to believe this is the best way to proceed.

Check out Bob Wachter’s take on the matter.

Remember when the consumer-directed health plan was supposed to create a rational marketplace that would save America’s health care system?

The 2008 Consumer Engagement in Health Care Survey conducted by the Employee Benefits Research Institute found that 3 percent of the population was enrolled in a CDHP in 2008, up from 2 percent in 2007 and 1 percent in 2006.  Enrollment in high-deductible plans–that is, a plan with a high deductible where the individual is not enrolled in a health savings account or health reimbursement account–remained at 11 percent.

Together, enrollment in a CDHP or HDHP represents 6.6 percent of the market for adults between the ages of 21 and 64.

Does this suggest that the promise of CDHP is not going to be realized? Paul Fronstin, director of the Health Research and Education Program at EBRI, doesn’t see it that way.

The fact is, you’re looking at about, as of last year, 10 million adults in a market that didn’t exist 10 years ago. You throw in the children and easily you’re at 15 million. And the number has been growing, and I think it will continue to grow.

The expectation shouldn’t be that this is something we’d see happen overnight. The fact that we’ve gone from zero to 10 million -plus, when you throw in dependents – in such a short period of time–leads me to believe it’s too early to say that these things aren’t catching on.

Details of the consumer engagement survey can be found here.

Everyone agrees that payment reform is needed, but the enthusiasm for simply paying primary care physicians at a higher rate does not do much for George Halvorson, chairman and chief executive officer of Kaiser Foundation Health Plan and Kaiser Foundation Hospitals. Here’s what he thinks:

To make payment reform really work, we need to focus on the end points that we want to achieve in care delivery, and not focus on pieces or individual process units. We should set goals that say we’re going to cut the number of kidney failures in half-for example – and then use payment reform to incent the care delivery infrastructure to actually achieve that goal.

But the model unfortunately that people keep using is a model that focuses on little incremental units of care, or doing things like changing the reimbursement model for primary care doctors. Frankly, the suggestion that people are making is that we increase the primary care doctor payment level by 5 percent in the hopes that somehow the primary care doctors, as a result of that, would ultimately do something positive relative to preventing kidney failure. I think that’s far too indirect. I don’t think it’s a good, crisp business model.

We will be far better off if we identify the steps needed to reduce kidney failure, and then pay primary care doctors and specialists more for doing those particular steps. Instead of doing an indirect model that doesn’t really focus the energy and the creativity, we need a model that very specifically identifies targets, and then reforms payment relative to those targets.

I interviewed George C. Halvorson, chairman and CEO of Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals, last week. Kaiser Permanente is the nation’s largest integrated health plan, serving more than 8.4 million members in nine states and the District of Columbia, so I am interested in what he considers the perfect health care system.

Are you ready?

“A perfect system basically says that we should have all of the information about all of the patients, all of the time, and that information should be available in real time. It should be available to the caregivers and to the patients; and the information should include information about each patient and about their conditions, and about optimal treatments for the conditions. And all of that connectivity is possible. It’s all doable. Pieces exist, but we have chosen not to put those pieces in place in a way that we should put them in place.

What I’m going to be arguing and suggesting is that we need to e-connectivity, e-visits, e-scheduling, e-linkages, that the patient should be able to get e-consults, and that the computer and connectivity should become possibly the single most important tool available to healthcare. That the computer should go from being something that just stores data and is rarely used to improve care, to being maybe the single most important tool in care–a  little bit like Bones in Star Trek, when he pulled out that little device and scanned the patient, and quickly get a sense of all of the information about the patient, and all of the information about the disease. I think that’s actually a model for where healthcare ought to go, is they ought to be creating that kind of functionality. Probably not hand-held at this point, but actually, hand-held not that far down the road.

We need computer models of the human body, we need computer models of the patient, but we also need information about each patient, and that information needs to be real time, and it needs to be focused on best care. So, I’m (advocating) about the need to move this country and our healthcare infrastructure toward the perfect system and the perfect set of connectivity, and basically say that doing anything less than that would be a huge mistake, and almost criminal relative to our patient care.”

I had the chance to interview Dr. Paul Ginsburg, president of the Center for Studying Health System Change, as a preview to his presentation at the World Congress on Consumer Healthcare and Wellness in mid-September.

Dr. Ginsburg is an economist, nationally recognized for his work in health economics and health policy, especially healthcare market changes and cost trends. He will participate in a panel that addresses something everyone in health care is wondering about:  Will Consumers Be Effective Catalysts to Reform the U.S. Health System?

Butcher: You just released a study that says 56 percent of American adults – that’s more than 122 million people – sought information about a personal health concern from a source other than their doctor during 2007. Does this suggest that Americans are becoming more active participants in their healthcare decision making?

Ginsburg: Oh, yes, they certainly are. American’s interest in their health has increased a great deal, say, over the past decade. We just know how much more space newspapers and television is devoting to personal healthcare issues, and of course we have a lot of development on the internet as far as sites that people can go to seek this information.

Butcher:  Many health plans have developed consumer support tools – speaking of the internet – such as online information about hospital and physician quality, and calculators that help plan members estimate the cost of care. Are consumers using these tools, and if so, how are they using them?

Ginsburg: Well, I’ve spoken to the plans, and the plans are all eagerly developing these tools. So when you ask them, Are consumers using them? They don’t know.

My sense is that this is clearly the direction long-term where plans will play an increasingly valuable role as an information intermediary. But I think we’re at the very early stages of it, and I doubt that there’s a lot of use. I doubt that consumers are depending on it.

One of the chicken-and-the-egg problems is that I don’t think consumers are going to be very receptive to using price information until they have more confidence in understanding the quality of different providers… Consumers can actually act perversely in the sense of not having confidence in the quality information, and equating higher price with higher quality, and thus shifting to higher priced providers, even if they actually reduce their quality of care in the process.

Butcher:  Is America’s healthcare system organized in a way that allows consumers to be effective shoppers for healthcare services? And does the healthcare marketplace respond to consumer behavior in the same way that the retail marketplace works?

Ginsburg: No, the healthcare system is very far from accommodating consumer desires, to the degree they have them, of being effective shoppers. For most cases,  medical care isn’t standardized enough that you can just call up places and, knowing what you need,  find out what the price is and the indicators of quality. Because so much of health care involves diagnosis, checking into what something is going to cost (and learning about) a provider (requires the patient) to invest a lot of time and money to make that call.

If you go to the dentist, if you need an inlay put in, a dentist won’t give you that over the phone because they’re going to say it all depends on the details of your condition. So, you’re going to have to invest the time and money of visiting a dentist to get an estimate.

So, I don’t think the healthcare consumer will ever be able to be as good a shopper as in other areas.