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FORUM
In Health Care, Do We Get What We Pay For?
Medicare, for example, is studying the impact of performance incentives. In July 2003, the Centers for Medicare and Medicaid Services (CMS) began a three-year demonstration project in which hospitals showing high-quality care for heart attacks, heart failure, pneumonia, hip or knee replacement surgery, and coronary artery bypass surgery were paid 1 to 2 percent bonuses. Mark Wynn, director of payment policy demonstrations for CMS, says that testing the effects of pay for performance on quality and cost through this project will help policymakers understand whether or not the strategy works, whether it has differential impacts on hospitals, and whether or not it results in hospitals "teaching to the test"--that is, improving performance in the measured areas, to the detriment of those areas not measured. "The early results show improvements on the measured variables," said Wynn.
Most recently, the Medicare Payment Advisory Commission (MedPAC), has recommended CMS implement pay-for-performance measures. In testimony before Congress this past March, MedPAC argued that tying financial incentives to performance measures would improve quality by rewarding providers for better care. "Current payment systems in Medicare are at best neutral and at worst negative towards quality," said Glenn Hackbarth, chairman of MedPAC. "All providers meeting basic requirements are paid the same, regardless of the quality of service provided. At times, providers are paid even more when quality is worse, such as when complications occur as a result of error." Sticking to CarrotsIn addition to Medicare's efforts, some private organizations are experimenting with pay for performance. One of these is the Pacific Business Group on Health (PBGH), a nonprofit business coalition whose membership includes 50 large purchasers that cover three million employees, retirees, and dependents. David S.P. Hopkins, director of quality measurement and improvement at PBGH, highlights the potential of financial incentives to improve quality: "We are engaged in a massive experiment here in California," he said. Physicians in the state are organized into group practices, which negotiate with six major health plans for services and rates. The number of groups totals 200 to 300--the largest is made up of some 2,000 physicians.Employers, assisted by PBGH, have succeeded in convincing health plans to contract with these physician groups based on a set of measures divided into three broad categories, clinical, patient experience, and investment in information technology. The clinical measures include preventive and chronic disease data, and patient experience measures are based on a survey addressing communication, timeliness, and other factors. IT investment is gauged by a survey of physician groups that focuses on the groups' ability to use IT in tracking patients with particular chronic diseases and by the use of electronic medical records, electronic prescribing, and reminders to physicians at the point of care. The first payments for performance will be made this summer. In the coming year, the number of measures will be expanded in an effort to counter the teach-to-the-test concern. "We don't know if it will work," said Hopkins, "but we know how motivated these groups are to measure and improve their performance. I don't think much would happen without the financial incentive as these groups are pretty stretched financially." In the first year of the program, about $100 million will be disbursed as part of the initiative. Does Pay Boost Performance?Not everyone is as sanguine about the pay-for-performance movement. In the March/April 2004 issue of Health Affairs, Bruce Vladeck, the former administrator of Medicare, argues against the ability of payment incentives to improve quality: "'Pay for performance' is the kind of seductive focus group-tested catch phrase that has come to dominate much of health policy discourse, but is largely devoid of real content." He goes on to criticize the ability of a large purchaser such as Medicare to alter behavior of providers, and while he lauds the goal of improved quality, he argues that financial incentives are not appropriate or effective.Nevertheless, the results of such experiments will likely reveal whether quality can, in fact, be improved through financial incentives. "The issue is ripe, and well worth testing," asserts Wynn. --Erica Seiguer, a fifth-year MD-PhD student studying economics in Harvard's Doctoral Program in Health Policy
Websites of Interest: The opinions expressed in this column are not necessarily those of Harvard Medical School, its affiliated institutions, or Harvard University. |
