All else equal, it would be wonderful if hospitals had an incentive to provide high quality care. It does not seem fair to pay the same amount of money to a hospital that does a great job of caring for its pneumonia patients and one that does a lousy job. For the most part, however, third party payers like insurance companies and Medicare pay hospitals for the volume of services they provide, or volume of patients they treat, not for the quality of the care they provide.
Inattention to quality is coming to an end. Hospitals are increasingly being paid in part for their performance. For example, in 2013 Medicare began a value-based purchasing program, or VBP. Under the program, Medicare withholds a percentage of payments throughout the year and then redistributes those dollars to hospitals that achieve the highest scores on a range of quality measures. In the first year of the program, this redistribution amounted to about $1 billion.
In theory, pay-for-performance makes a great deal of sense. But in practice, pay-for-performance is only as good as the quality measures used to determine performance. And Medicare’s measures, by placing significant weight on patient satisfaction scores, are hurting hospitals that disproportionately care for low income populations.
Let’s take a closer look at Medicare’s quality measures. Some are what healthcare experts call process measures, which identify whether hospitals do the right things at the right times to the right patients. When patients are admitted with heart attacks, for example, a process measure might assess how many of those patients receive aspirin and beta blockers upon discharge, or how many receive revascularization efforts in the cath lab within 30 minutes of arrival.
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What Happens When We Penalize Hospitals For Harming Patients?
I recently had surgery to relieve an impingement of my left hip. I suffered a complication of the procedure in the hospital where I received the surgery performed follow-up care to treat the complication. As I lay on the table receiving that second treatment I wondered – okay, I mainly wondered “are they really going to stick a needle there?!,” – but I also asked myself “how strange is it that when patients experience complications, hospitals are rewarded with money to perform additional procedures?”
Since 2008, Medicare has been denying payment to hospitals to treatments they provide as a result of preventable complications. For example, when patients are immobilized from illness or disability, they sometimes develop pressure ulcers – their skin breaks down where the weight of their body meets the bed or wheelchair. Pressure ulcers are a big deal. A red spot on a patient’s backside can quickly turn into a sore, then into an ever expanding mass of tissue damage and infection. Christopher Reeve, the actor paralyzed after a horseback riding injury, died from complications of a pressure ulcer.
Pressure ulcers can almost always be avoided by appropriate nursing care. If patients are turned regularly with appropriate bedding and wheelchairs, no single spot will take the brunt of their weight 24 hours a day, and therefore no pressure ulcers will develop. In recognition of the preventability of pressure ulcers, Medicare no longer reimburses hospitals for the services they provide to treat such problems. The same goes for catheter associated urinary tract infections, which I’ve written about before, as well as catheter associated blood stream infections and injurious patient falls.
Medicare’s non-reimbursement strategy makes a great deal of sense. At a minimum, it will save the program money. But will the program have additional benefits? Specifically, now that hospitals are no longer financially rewarded for causing these complications, will this reduce the incidence of these avoidable events? (To read the rest of this article, please visit Forbes.)
Could Pay-For-Performance Lead To Overuse Of Antibiotics?
Not long ago, the Joint Commission (a healthcare quality organization) established that patients with pneumonia should receive antibiotics within four hours of diagnosis. Timely diagnosis and treatment can be the difference between life and death in patients with this illness. In fact, some people believe this kind of quality measure should play a large role in how we pay for medical care. After all, doctors should not be paid solely on the basis of how much care they provide, but also based on the quality of that care. All else equal, a physician who treats pneumonia efficiently should be rewarded more handsomely than one who takes a fortnight to make a diagnosis.
Only one problem with this seemingly sensible view. Experts believe this four-hours-to-treat requirement leads to an over diagnosis of pneumonia and, consequently, to an overuse of antibiotics. How we measure healthcare quality, and how we factor such measures into physician reimbursement, can have surprising effects on how physicians diagnose and treat patients.
Consider another life-threatening illness – sepsis, a syndrome of widespread inflammation and, at its most extreme, multi-organ failure caused by infection. Sepsis typically requires not only high power antibiotics but also intensive care from multiple specialists. A recent article in the New England Journal of Medicine suggests we may be experiencing an over diagnosis of this syndrome, because hospitals often receive higher reimbursement for patients with sepsis than for ones with milder infections. In other words, it pays not to miss sepsis diagnoses. (Visit Forbes to read more and leave comments.)