Rewarding Provider Performance Aligning Incentives in Medicare (2007) / Chapter Skim
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1 Introduction
1 Introduction
Pages 15-31
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From page 15... ...
. The Quality Chasm report identified ten rules for redesigning health care processes to improve performance (see Box 1-1)
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The health care system should make information available to patients and their families that allows them to make informed decisions when selecting a health plan, hospital, or clini cal practice, or choosing among alternative treatments. This should include information describing the system's performance on safety, evidence-based practice, and patient satisfaction.
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In response to this mandate, the IOM charged the Committee on Redesigning Health Insurance Performance Measures, Payment, and Performance Improvement Programs to explore the implementation of rewards for provider performance in Medicare. In carrying out its charge, the committee considered the role of payment strategies within a broader set of interdependent performance improvement efforts that include performance measures, public reports, use of innovative technologies, technical assistance, provider and consumer education, provider certification processes, and new organizational structures; these efforts may all be tied to financial incentives.
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The report specifically addresses the creation of incentives designed to reward health care providers for improvements in care, as well as for their efforts that increase the value of health care services. This payment approach is part of a long-term strategy for better aligning the health care system with a vision of quality.
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. Several studies of rising health care expenditures have demonstrated that some of these costs are associated with important medical advances, improved health outcomes, and increased value over time (Cutler and Miller, 2005; Murphy and Topel, 2005)
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In addition, patients and their caregivers are becoming more active in managing their care, and are increasingly seeking providers who are sensitive to their needs and preferences, especially in such areas as patient provider communication, patient experiences with provider services, and attention to care transitions across care settings. New measures have recently emerged that capture these important dimensions of the patient's experience, and such patient-centered measures are becoming more important in consumer evaluations and professional certification of the performance of hospitals, physicians, long-term care facilities, other institutional health care providers, and health plans.
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Recognizing that there is room for provider improvement in all three domains, payment strategies should be aimed at achieving higher performance levels in all three and should also stimulate the development of measures to close existing gaps wherever feasible. Therefore, payment strategies should not be designed to reward high clinical quality alone, but should incorporate incentives to ensure that high-quality care is patient-centered and focused on efficiency as well.
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The impact of these efforts and their effects on provider behavior and patient health may not be realized for many years. The recent experimentation with pay for performance on the part of private health plans offers an intriguing and attractive potential source of guidance for alternative payment arrangements for traditional Medicare.
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. Medicare consists of four components: · Part A, the Hospital Insurance program, pays on a fee-for-service basis for inpatient hospital care and some home health, skilled nursing facility, and hospice services.
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· Part D, first implemented in 2006, provides coverage for therapeutic drugs through private health insurance plans. Medicare expenditures in 2004 amounted to more than $300 billion, 16.5 percent of the total national health expenditures of $1,878 billion (see Table 1-1)
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Current Medicare care payment practices can have toxic effects because they do not reflect the relative value of certain services, such as preventive and primary care, and place little or no emphasis on achieving high levels of clinical quality within a given amount of resources. For example, the physician's fee schedule does not pay providers adequately for cognitive services such as care coordination and patient education, which are essential for patients with chronic conditions.
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, creating a significant impetus for the development of payment strategies that can provide incentives for efficiency while encouraging high levels of clinical quality and patient-centered care. Because Medicare is such a large payer and because many private payers follow its policy lead, the program exerts a significant influence on the organization and delivery of health care services throughout the United States.
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One option is to allow quality improvement processes to evolve at a gradual pace, driven by motivated purchasers and providers, and implemented through scattered local experiments with new payment strategies in selected systems of care or geographic regions. This approach can reveal the opportunities and challenges involved in introducing new measures and performance-based care in the treatment of selected health conditions in different care settings.
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The committee also examines the core features necessary to implement a pay-for-performance strategy while respecting the need for variation and tailored approaches in different health care environments. CONCLUSIONS Changes in the structure of Medicare payments could have a major impact on the quality of care delivered by the entire health care delivery system.
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The lack of evidence associating pay for performance with improvements in clinical quality, patient-centeredness, efficiency, and, most important, outcomes of care suggests that caution will be necessary as Medicare proceeds. The consequences of aligning incentives to promote higherquality health care are largely unknown.
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2005. When the price isn't right: How inadvertent payment incentives drive medical care.
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2005b. Report to the Congress: Medicare Payment Policy.
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