Health Care Payment Reform

Senator Max Baucus’s health care proposal would provide financial incentives to hospitals and physicians willing to work together as accountable care organizations. Here’s what is required, according to his proposal:

To qualify as an ACO, an organization would have to meet at least the following criteria: (1) agree to become accountable for the overall care of their Medicare fee-for-service beneficiaries; (2) agree to a minimum three-year participation; (3) have a formal legal structure that would allow the organization to receive and distribute bonuses to participating providers; (4) include the primary care physicians for at least 5,000 Medicare fee-for-service beneficiaries; (5) provide CMS with information regarding primary care and specialist physicians participating in the ACO as the Secretary deems appropriate; (6) have arrangements in place with a core group of specialist physicians; (7) have in place a leadership and management structure, including with regard to clinical and administrative systems; (8) define processes to promote evidence-based medicine, report on quality and costs measure, and coordinate care; and (9) demonstrate to the Secretary that it meets patient-centeredness criteria determined by the Secretary, such as use of patient and caregiver assessments or the use of individualized care plans.

And here is how incentive payments would be determined:

To earn the incentive payment the organization would have to meet certain quality thresholds. In determining the quality of care furnished by an ACO, the Secretary would be required to use measures such as: (1) clinical processes and outcomes; (2) patient and caregiver perspectives on care; and (3) utilization and costs (such as rates of ambulatory-sensitive admissions and readmissions).

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.

Dr. Ron Paulus, chief technology and innovation officer at Geisinger Health, tells me that Geisinger is working on a model to encourage patients to comply with physicians’ orders–because patients tell physicians what orders they want to receive.

It seems to be working. Here’s what he says:

We know that many patients don’t actually follow the advice that they’re given by their physician, and our belief is that’s not because those consumers are stupid or mean-spirited. They’re actually very smart and they have a lot invested in their own health, obviously. We felt that there was a disconnect between what that consumer may be desiring and what it is that is being prescribed.

So we developed a mechanism, a touch screen-based questionnaire method, to elicit what kinds of interventions patients with coronary artery disease might be willing to undergo. Would they be more interested in drug therapy, or more interested in diets, or more interested in exercise?  And we also asked them questions, including, “I don’t want to do anything about my care.”

We think it’s very, very important to elucidate those preferences so that the doctor/patient interaction can focus on education, counseling, advice, and mutual engagement around what the right strategy is in caring for this particular patient’s disease.

…This whole area of activation and preference-eliciting is trying to make sure that the clinician and the clinical team and the consumer patient and his or her family or loved ones are all on the same page together. They all understand their mutual responsibilities, and they’re working toward a common outcome goal, where that consumer is engaged and willing and eager to follow that plan to achieve better health.

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.

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.

The Medicare Payment Advisory Commission, which guides the nation’s largest health care payer, is suggesting major changes to the way health care is delivered in America. 

It may not take much more press like this before hospitals may start giving up their tax-exempt status voluntarily.

As reported on the WSJ’s Health Blog, Sen. Charles Grassley is turning the heat on hospitals that get tax-exempt status, questioning whether their public service warrants the special treatment.  The pressure is only going to build on this issue, as hospitals become ever-more business-savvy to compete in a time of a declining reimbursement rates.