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Rewarding Provider Performance: Aligning Incentives in Medicare
are known to be at high risk for adverse clinical outcomes. As the evidence base continues to grow, providers will be better able to identify prospectively those patients likely to respond poorly to their care. Process-based performance measures may exert a similar adverse selection pressure. Noncompliant patients constitute a particularly frustrating group of patients to manage, putting health care providers at risk for poor performance based on measures of both process and outcome. If providers react by avoiding these patients to keep their performance scores high, the result could be restricted access to care and worsened health. This is the case especially for the old or chronically ill; initially at higher risk, their health status is more likely to deteriorate and at a faster rate if their access to care is limited. Therefore, researchers must make the investigation of risk adjustment for performance measures a high priority. For example, pay-for-performance programs might be structured to give greater rewards to providers who treat high-risk patients (see Chapter 4). If pay for performance is to realize its full potential for change, it will be necessary to engage providers in the care of these challenging patients.
The public reporting of provider performance may also contribute to decreased access. As emphasized throughout this report, public reporting is a cardinal feature of health care reform as it enhances transparency. It can be a powerful motivator to guide change in provider behavior and provide consumers with key data on which to base good decisions (Shaller et al., 2003). Both of these effects are thought to result in higher-quality health care, which in turn represents better value (Marshall et al., 2000; Mason and Street, 2006). At the same time, however, there is concern that the public reporting of provider performance could have unintended adverse consequences. Health care consumers, both individual patients and payers for health care services, would likely seek out the high-quality providers. Providers shown to perform at lower levels might opt to reduce their Medicare caseloads in favor of participants in private plans. As a result, some consumers could be denied access to the care they desire.
Previous IOM reports have highlighted disparities in quality of care that occur along many specific dimensions, including geographic region; provider type; and patient age, sex, and ethnicity (IOM, 2002, 2005). Disparate care is, by definition, low-quality care, and pay for performance could exacerbate such disparities. Populations most affected by disparities in health care are cared for disproportionately by undercapitalized providers who are likely to lack the resources necessary to invest in the infrastructure (such as health information technology) needed to facilitate participation in pay for performance. Nevertheless, the health care services they offer