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 Donald W. Fisher,  president and CEO of the American Medical Group Association (AMGA), a trade association that represents medical groups, including some of the nation’s largest, most influential integrated health care delivery systems.  

AMGA’s membership includes medical groups that deliver health care to more than 50 million Americans in 42 states.

Butcher: What have we learned from the many pay for performance programs that are already in place?

Fisher: I think probably what we’ve learned from the get-go is that pay for performance just in and of itself does not go far enough, that if you build onto a current perverse reimbursement system incentives to kind of pay for assumed outcomes, you’re just going to get some small incremental improvements, but you’re never going to really get us to where we need to be with a new reimbursement system that really rewards quality and efficiency. Our current system which is built on volume and through-put simply will never get us there, so we need a whole new reimbursement system. I think that’s probably what we’ve learned the most is that it’s a great first step. It’s got us thinking about a new culture of payment that we need to change what we’re currently doing, but it’s not the final destination. It’s just a stop along our journey.

Butcher:  How soon do you see real payment reform coming, and do you foresee this as something that will happen gradually or are we getting ready for a rapid shift in the way care is paid for?

Fisher: I would like nothing more than to see a rapid shift to move completely away from the fee for service through-put model into something new. There’s a whole lot of proposals on the table that will get us there. I say that simply because we continue to pay for…the poorest quality gets paid the most in this country, and the less efficient providers get rewarded the same as the efficient providers. In fact, the efficient providers often get penalized for providing care efficiently and high quality. I’d prefer a rapid shift. My gut, though, says that it probably won’t happen that way. It will be incremental. There will be a lot of pilots. There will be testing of different payment mechanisms that will go on over the next three to five years, but we’ve got to have something by 2015 to 2018, because that’s when the babyboomers will be enrolled in Medicare in 2011, growing in significant numbers each year. They’re going to start to hit some chronic care conditions that are going to really drive our costs through the ceiling by 2015 to 2020.  I think it will be incremental. I’d love to see it be a rapid shift.

Butcher: Who do you think will initiate payment reform? Will this come from Medicare – I’m familiar with the MedPAC proposal – or private payers or perhaps providers themselves?

Fisher: When I look at this, I think that probably the drivers are going to be the employers and the providers themselves. I really don’t see Congress being the lead in creating health care reform. You kind of have a chicken/egg. You’ve got this large Medicare program which consumes most of the dollars in health care in this country, but yet you’ve got them governed by a Congress that has a very politicized way of looking at things. So it’s very difficult to get through the politics to do what’s really right for Medicare beneficiaries, and it’s really difficult to make changes in the system. My guess is it probably won’t come from Congress at the initial site. You’ll see a lot of things going on in the commercial side, a lot of experimentation pushed by providers as well as the employer community.