Health Care Payment Reform

I enjoyed interviewing Jack Needleman, PhD, an associate professor in the Department of Health Services at UCLA’s School of Public Health. His research focuses on the impact of changing markets and public policy on quality and access to care.

Dr. Needleman is currently leading the team evaluating the Robert Wood Johnson Foundation initiative, Transforming Care at the Bedside, which is intended to improve the quality, safety, patient-centeredness and efficiency of hospital medical surgical units by engaging front line staff and unit managers in process improvement. 
 

Butcher: There are so many quality measurement initiatives in health care currently underway. Where is this movement headed?

Needleman: That’s a big question. If you look at the types of measures that are used, they fall into four categories: outcome measures like deaths or falls, process measures like beta blockers on discharge, structural measures like staffing levels, and perception measures from surveys such as the adequacy of pain management or communication with physicians and nurses. There are several directions that I think we’re moving in with regard to all of these kinds of measures. One of them is to simply expand the number of measures which raises issues of burden.  A second issue that’s emerged is what balance should there be among the four categories? Related to that, whether to give prominence to outcome measures, which require adequate risk adjustment and all the problems involved in that, or process measures which require that you have competence that the process is in fact closely associated with outcomes that we care about. So that’s a second ongoing debate that is nowhere near resolved.  A third direction is to increasingly link payment to adequate performance on specific measures.  There’s a substantial debate going on over which measures to pay on and how strongly payment should be affected by the measures.

Butcher: You mentioned burden there. I know many hospitals complain already about the burden associated with supporting the various quality measurement initiatives they participate in.  Do you see any relief for providers on the horizon?

Needleman: I think there are two different kinds of burdens we need to think about. One is due to different organizations requiring different measures of the same or similar outcomes of processes.  That, I think, is an easier issue to address, and I do see conscious efforts among the different parties, the payers, the creditors and regulators, groups that endorse measures like the national quality forum, to move to some conversion over which version of the measure is required. So that burden, I think, is going to get easier.
 
The second kind of burden is over the number of measures and whether those that are required for external reporting are actually useful for internal management in quality improvement.  I think one of the reasons why providers perceive a burden there is they don’t perceive the measures they are being asked to deliver to the outside world particularly useful in their internal work.  That’s a more difficult issue to address. Relief may emerge to the extent that providers can make the case that they are using measurements internally to improve, and the measures most useful for this work should be those that are required for external reporting.

I was lucky to interview Stuart Guterman, senior program director of the Medicare’s Future program at the Commonwealth Fund. A couple of things that caught my attention:

Lola: How should value in health care be measured, and do we need more measures or fewer?

Guterman:  That’s really the crucial issue. There has been a lot of discussion about paying for outcomes, and certainly one can make a strong case that how the patients survives the health care, what the health status of the patient is in the long run is really the bottom line. But I think we are where we are on being able to pay for quality because we’ve developed a set of more reliable process measures, that is measures of how services are provided that are expected to lead to better outcomes. So we now can put together a list of things that are pretty much accepted as ways health care should be provided that will lead to better outcomes.

In terms of more measures or fewer, there are arguments for fewer measures because a long list of measures is thought to present the prospect of confusion. I think that actually if you have a longer list of measures and if you really are comprehensive in the list of measures for what you pay for, then you’re really transmitting a broader message that the objective is to improve quality and improve the value that you get for the health care dollar.  I think that’s really the message that needs to be sent in value-based purchasing, not doctors should do this or doctors should do that. Doctors should really do a broad range of things that lead to better health for their patients.

Lola: How should providers be rewarded for value?

Guterman:  There are different ways to approach rewarding for value. Certainly you want to reward providers that provide the best care.  There have been studies that found, however, that if you rely only those kinds of measures, then you end up basically making most of your bonus payments to providers who already are at the level that you’re looking for.  If you’re really trying to improve the system, then you need to provide incentives for providers that aren’t where you’d like them to be to get where you’d like them to be.

So I think at some point you need to be able to reward improvement over time, and I think you also, when we have more information and we’re able to be more confident about setting levels of acceptable care, that we might want to pay on that as well. I think a good pay for performance system will basically incorporate measures of all three types of good performance so that we can have rewards for the folks who do it right, incentives for the folks who aren’t quite there yet but are improving, and then some more explicit recognition of the fact that you really need to be at a certain level in order to be considered a top-notch provider.

Physicians who do not like pay-for-performance programs may rue the day they started complaining about them.

P4P programs, which generally keep patients out of the mix, are easy to accept in comparison to public rating systems that reward patients, via lower copayments, for learning which physicians offer the highest quality care at the lowest cost and taking their symptoms to those doctors.

Physicians are understandly nervous about ratings, which can be misleading or downright wrong. But payers–frustrated that the P4P movement is going nowhere fast–are looking for new ways to reward physicians who will get in line with payers’ cost-effectiveness goals, and physician ratings is one of them.

In Massachusetts, the state medical society sued Group Insurance Commission, which buys insurance for more than 300,000 current and retired state employers, claiming that its physician rating system “fraudulently misleads patients and unfairly affects the reputation of physicians.”

No quaking in Massachusetts. Other payers are undaunted. As reported in the Boston Globe, two of that state’s biggest health plans are moving ahead with physician rating systems instead of waiting for the lawsuit to play out.

The New York state Medicaid program is the latest to announce it’s going to stop paying for some of the so-called health care that hospitals provide that, in fact, hurts more than it helps. Wrong-site surgery, anyone? Foreign object left in during surgery?

FierceHealthcare reports on the latest payer to make the seemingly common-sense move to stop paying for preventable medical errors:

New York’s Medicaid program has decided to stop reimbursing for avoidable hospital complications and medical errors it considers to be “never events.” Starting in October, it won’t pay for care related to 14 conditions, including wrong-site surgery; foreign objects left in the body; medication errors; blood incompatibility; contaminated drugs and patient disability from electric shock. Hospitals that want to receive Medicaid payments will have to prove that such conditions were present on admission to get paid for treating them. Meanwhile, the state expects to keep expanding this list.

This trend, which now includes Centers for Medicare &  Medicaid Services, CIGNA, WellPoint, and lots of others, makes so much sense…and yet why does this feel like a raft of unintended consequences getting ready to be revealed?

It is regrettable that hospital administrators do not recognize, let alone deal with, the unacceptability of preventable medical errors until payers start refusing to send the checks. There’s no doubt that the financial consequences of poor practices that result in infections and other serious medical harm will get hospitals to change their ways. But at what cost? The bureaucracy that is being built up to make the “no pay” trend work will be substantial, adding to the high cost of care. And the high cost of care translates into reduced access for some patients.

Term limits for legislators seemed like a good idea until they were passed–and now they look like big problems. I wonder if we’ll say the same thing about the ‘never event’ trend some day.