Performance Incentive Programs in Healthcare - Research Paper Example

I. Introduction A. IOM Crossing the Quality Chasm report On January 6 and 7, 2004, the Institute of Medicine (IOM) hosted the 1st Annual Crossing theQuality Chasm Summit, convening a group of national and community health care leaders to pool their knowledge and resources with regard to strategies for improving patient care for five common chronic illnesses. This summit was a direct outgrowth and continuation of the recommendations put forth in the 2001 IOM report Crossing the Quality Chasm: A New Health System for the 21st Century. The summit’s purpose was to offer specific guidance at both the community and national levels for overcoming the challenges to the provision of high-quality care articulated in the Quality Chasm report and for moving closer to achievement of the patient-centered health care system envisioned therein. The report of IOM revealed that errors and lack of quality in health care are a serious problem that accounts for as many as 44,000 to 98,000 deaths per year in the US which is more than the number of people who died from breast cancer, AIDS or motor vehicle accidents (IOM, 2001). These errors were a result of system failures and meant redesigning a safer system of care to prevent such errors from occurring again. In response to the IO report Congress appropriated $50 million for patient safety center with many national associations taking action. In the second report of the Committee on Quality of Health Care in America, the “quality gap” of the health care practice in America was revealed with over 70 studies documenting quality shortcomings. The quality gap was more prominent between the care that people should receive and the care that they do not receive. B. Flaws in structure of the current health care payment system- fee for service Part of the structural flaw that led to quality gaps and the deteriorated state of US health care system was partly attributed to the systems of payment to medical providers that does not encourage quality but rather volume. 1. Fee for service does not consider quality, efficiency, and cost management The quality gaps and deteriorated state of health care that is susceptible to error that accounted for 44,000 to 98,000 deaths per year in the US could have been attributed to the fee for service payment system that does not consider quality, efficiency and cost management (IOM, 2001). The fee for service payment systems stresses more on quantity and volume rather than the quality of care that a medical provider gives to a patient. 2. Managed Care Organizations differ HMOs, PPOs are third party managed care organizations that also differ in payment to medical providers. This payment system is not driven to provide quality care but to reduce its cost which could be inimical to the quality of care rendered since the fees are already predetermined. The current payment environment reimburses health care providers for services they render and being such, encourages volume of service rather than quality of care. This has also the unintended consequence of inflating the “the costs of health care because the payment method rewards providers for more services, whether or not these services are warranted or not” (Castro and Layman, 2006 pg. 6) C. Link financial incentives to high-quality care, Quality and Cost link 1. Based on value To shift health care priority from scale to quality, scheme for financial incentives has to be altered. Such, incentives or rewards should be given not on the number of services rendered but rather on the quality of care to alter mass production of health care that is susceptible to errors that had caused thousands of deaths. The shift towards quality will also alter the behavior of inflating the cost of health care because reward is no longer paid on the number of services but rather on meeting quality standards. I. Pay for performance “Pay-for-performance or P4P is a quality improvement strategy that employs financial incentives to improve compliance with evidence-based clinical practice guidelines, to improve patient experience, to induce investment in information technology that is expected to improve quality and outcomes of care, and sometimes to improve the efficiency or cost-effectiveness of care” (Steinberg, 2006 pg. 11). The program collaborates with “providers and other stakeholders The foundation of effective pay-for-performance initiatives is collaboration with providers and other stakeholders, to ensure that valid quality measures are used, that providers are not being pulled in conflicting directions, and that providers have support for achieving actual improvement” (Centers for Medicare and Medicaid Services, 2005). It is a response to the initiative to the rising health care issues such as “rising medical cost trends, the growth in chronic care conditions, healthcare utilization, consumer directed healthcare and demands by purchasers for improvements in the quality of care” (Baker et al, 2003) and is dictated from the health care quality improvement imperative to make health care delivery more responsive and efficient. The Pay for Performance works by compensating physicians and medical institutions according to their performance, which would come in the form of a bonus in addition to their standard fee-for-service compensation. II. Quality Issues: advantages & disadvantages of process and criteria used It is important to stress that the adoption of pay for performance payment system is intended to improve the quality of health care and reduced its costs. While its efficacy is still equivocal (Long et al., 2008), it can be construed that this intent is one of the inherent advantage of the pay for performance payment system. One of pay for performance immediate advantage is that the payment system discourages the unnecessary inflating of health care costs because providers will no longer have the need to add unnecessary procedures to achieve scale where they were used to get incentive. This could lead to the reduction of deaths that led to errors which the pay for service may inadvertently caused as this payment system overlooks quality to achieve volume. Policy implication advantage It is interesting to note that in the study of Jha and colleagues, it was reported that while disadvantaged hospitals started at the bottom when they started the program, the performance gap between a high resourced hospital and disadvantaged hospital actually closed after three years of joining the program. The study, albeit many limitations, suggests that the implementation of the Pay for Performance program provides a tremendous opportunity for underfunded hospital to improve although the factors that led to such improvement were not determined (Werner, 2010). Disadvantage: The incentive program of giving reward to those who are performers and penalizes those who who underperform through disincentive may mean well and seem logical. As Meddings and McMahon put it “linking the incentive dollar with healthcare outcomes seems like a perfect solution. . . [that] we should pay more for better care and less, or not at all, for inferior care” (2008 pg. 205). The same study however also reported that pay for performance is neither simple nor logical. It is based on the premise that incentive will change the behavior of the medical providers through incentive that would yield higher quality of medical care. Pay-for-performance programs target several categories of performance measurement: clinical measures (process and outcome measures), patient experience, and certain aspects of practice/hospital management. Its process measure evaluates a provider’s behavior according to the guidelines of care “such as the rates of administration of aspirin and ß-adrenoceptor antagonists (ß-blocker) when patients with MI are first evaluated” ((Meddings and McMahon, 2008 pg. 207). While this process is meant to measure the providers’ behavior, most process however requires an element of patient cooperation and this is where the limitation of pay for performance lies. Quality and process Issue To illustrate the limitation of pay for performance metrics in determining quality care, the study of Meddings and McMahon applied a common set of performance measures and scoring between two patients who have diabetes. These two patients have the same history of diabetes and the same medical and prescription coverage. With these two patients, patient A is more cooperative. Patient A takes medication as prescribed by his physician and goes to clinic visits when requested. He also follows his physician’s advice to diet and exercise, monitor sugar level and foot care. Given the patient’s cooperation with the physician, it only follows that patient A will achieve optimal result with an excellent blood pressure, glucose and cholesterol control (2008). Patient B however demonstrates a different kind of circumstances and behavior. First, he misses his doctor’s appointment and he does not understand why he has to take medicine when he is feeling well. And though Patient B has the same co-pay with Patient A having the same type of insurance coverage, Patient B’s co-pay eats up a significant portion of his earnings which perhaps the reason why Patient B misses appointments. Despite of this, Patient B’s physician is persistent to better Patient B’s condition by engaging the patient in self-care since Patient B misses appointments. Patient B’s physician instead adjusts the medication by phone because he is missing his clinic visits as recommended by the doctor. Patient B’s physician has also difficulty in getting all the tests. Still Patient B’s condition improved due to the persistent care of his doctor (Meddings and McMahon, 2008). Grading Patient A and B’s physician will yield different result despite Patient B physician’s effort. On the pay for performance criteria for excellent diabetes care, Patient A’s physician will have a mark of “pass” on the seven diabetic measures: ” obtaining results for HbAic, an LDL-C level, a nephropathy screen, and an eye examination, and outcomes of HbAic Read More