Crossing the Quality Chasm A New Health System for the 21st Century (2001) / Chapter Skim
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8 Aligning Payment Policies with Quality Improvement
8 Aligning Payment Policies with Quality Improvement
Pages 181-206
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From page 181... ...
Thus, to achieve the aims of the 21st-century health care system set forth in Chapter 2, it is critical that payment policies be aligned to encourage and support quality improvement. Yet financial barriers embodied in current payment methods can create significant obstacles to higher-quality health care.
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From page 182... ...
Although more fundamental change may be required in the long run, immediate improvements can and should be pursued. Recommendation 11: The Health Care Financing Administration and the Agency for Healthcare Research and Quality, with input from private payers, health care organizations, and clinicians, should develop a research agenda to identify, pilot test, and evaluate various options for better aligning current payment methods with quality improvement goals.
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From page 183... ...
Pilot testing should include an evaluation of the use of bundled payments for priority conditions to provide incentives for redesigning care processes and to permit resources to be allocated according to the scope and types of services needed by patients. The committee believes certain principles should guide the development of payment policies to reward quality, regardless of the specific payment method used for any given transaction.
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From page 184... ...
The third section describes how existing payment methods could be adapted to support quality improvement. Although difficult to accomplish in today's environment, examples are provided to illustrate how some health care organizations are attempting to incorporate greater attention to quality in their payment arrangements.
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From page 185... ...
To have this role, consumers should have choices, receive information about their choices, and have the power to act on those choices. Not all consumers have a choice of health plans (Truce, 2000)
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From page 186... ...
The following subsections provide a brief overview of common payment methods and the theoretical incentives offered by each. Four types of payment methods are reviewed: methods that pay by prospectively determined budgets regardless of whether services are used, per case payment methods that pay for a bundle of services used in a case, methods that pay by a unit of care as the units are used, and blended methods that combine approaches (Acts, 1995~.
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From page 187... ...
. Medicare prospective payment for hospitals is generally believed to have reduced spending growth and increased efforts by hospitals to control costs, as evidenced by shorter lengths of stay and increased margins (Medicare Payment Advisory Commission, 2000a)
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From page 188... ...
Concerns with bundled payment approaches include questions about which entity should receive the payment and be held responsible for care (Welch, 1998~. Possible responsible entities include health plans, hospitals, and physician groups.
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From page 189... ...
This mix has a significant influence on how payment methods can inhibit quality improvement, as discussed in the following section.
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From page 190... ...
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From page 191... ...
Indeed, a variety of barriers embodied in current payment methods prevent health care organizations from pursuing quality improvement. The following subsections describe examples of four such payment barriers: perverse payment methods, adverse risk selection, annual contracting arrangements, and up-front investments required by provider groups.
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From page 192... ...
Data from two randomized controlled trials demonstrated that better sugar controls should translate into lower rates of retinopathy, nephropathy, peripheral neurological damage, and heart disease (The Diabetes Control and Complications Trial Research Group, 1993~. The savings in direct health care costs (i.e., reduced visits and hospital episodes)
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From page 193... ...
Under billed charges, the hospital could lose revenues if reduced infections meant fewer services provided. Hospitals could gain under per diem methods if the length of stay remained the same for patients, but they used fewer resources each day because of the avoided infections.
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From page 194... ...
This reinforces the perception that improving quality costs money. Even when care delivery groups want to improve the quality of the clinical processes and outcomes they routinely deliver to their patients, they can be severely limited in their ability to pursue such strategies if providers lose revenues from many quality improvement activities because of the expenses of implementing the improvements and the revenues lost as a result of reduced care delivery.
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From page 195... ...
Both insurers and providers are concerned that undertaking quality improvement and publicizing quality outcomes will attract patients more likely to have conditions that make them high users of care and high-cost (Dudley et al., 1998~. For example, if a health plan has a good program for identifying and managing those with diabetes, it is likely to enroll more diabetic patients.
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From page 196... ...
In risk adjustment, the objective is to identify the subpopulation at risk of high utilization and high cost, whereas in quality improvement, the objective is to identify all patients with a particular condition who could benefit from treatment (Dudley et al., 2000~. On the one hand, if there is a potential for higher payment, health care organizations are likely to identify as many at-risk patients as possible and collect whatever information is necessary.
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From page 197... ...
The ability of consumers and patients to do so can be a strong motivator for clinicians and health plans to offer such good care that people will not want to leave. Up-Front Investments Required by Provider Groups Provider groups face two specific managerial issues that are affected by payment arrangements and can hamper efforts by health care organizations to pursue quality improvement: (1)
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From page 198... ...
The impact of the proposed clinical quality improvement initiative is rarely evaluated in terms of savings in fixed costs, since those costs accrue over a longer time period. Fixed costs are expenses that a physician, clinic, hospital, or delivery system must pay regardless of patient volumes, such as payments for buildings, diagnostic and other equipment, licensing and regulatory fees, malpractice insurance, and minimum required staffing.
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From page 199... ...
This investment should include tools and training in quality methods, but also adequate information systems that can be applied to clinical quality improvement (see Chapter 7~. ADAPTING EXISTING PAYMENT METHODS TO SUPPORT QUALITY IMPROVEMENT As noted earlier, the IOM held a workshop on April 24, 2000, to discuss the relationship between payment and quality improvement.
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From page 200... ...
Rather than being directed at selection of a health plan, the information is at the medical group level, where consumers can evaluate their own trade-offs among cost, quality, access, and any other dimensions of importance to them. Adapting Blended Payment Methods Ann Robinow of the Buyers Health Care Action Group, Minneapolis, Minnesota, described what some have termed a direct contracting approach.
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From page 201... ...
NEED FOR A NEW APPROACH Although incentives to improve quality could be strengthened through incremental improvements in existing payment methods, more significant reform of the payment system will be needed over the long term. All health care organizations face serious barriers in pursuing broad-based efforts at quality improvement, and providers face a mix of incentives from different payment methods.
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From page 202... ...
For example, a patient with a chronic condition may be seeking the acute care services traditionally covered under insurance, but may also need, for example, services related to counseling and behavior change, support groups, e-mail access for communication between visits, strongly managed and continuous coordination with other health professionals, and medical supplies. However, today's payment approaches offer a chronically ill patient face-to-face office visits as the primary mechanism for receiving care and rarely encompass the range of services needed across the continuum of care.
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From page 203... ...
For example, to the extent that monitoring of patients can occur partly through e-mail, some office visits may be eliminated, as in the case of patients with controlled chronic conditions who may be able to visit their physician's office twice a year instead of quarterly, relying on electronic communication between visits. Third, use of computerized drug prescribing has been shown to reduce medication errors, which are known to increase costs (Bates et al., 1997, 1998, 1999~.
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From page 204... ...
Incentives and Provider Payment Methods. International Journal of Health Planning and Management 10:23-45, 1995.
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From page 205... ...
Luft. Reconciling Quality Measurement with Financial Risk Adjustment in Health Plans.
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From page 206... ...
Who Has a Choice of Health Plans? Washington, D.C.: Center for Studying Health System Change, Issue Brief Number 27, 2000.
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