doctor, boy, check up

Aligned incentives, better outcomes

May 21 2014

The health care landscape continues to shift under the Affordable Care Act. One of the fastest growing changes is the way doctors are paid to deliver care.

The system is shifting away from paying for the volume of services delivered to patients.

The new system pays for improving patients’ health. Critics say the traditional fee-for-service model may sacrifice quality for quantity and that it leads to more than 39,000 avoidable deaths each year and more than $2.8 billion in avoidable medical costs, according to data from the National Committee for Quality Assurance.

Under the payment model widely known as “pay-for-performance,” hospitals and doctors are scored based on how well they care for patients. They are measured on tangible standards such as helping people with diabetes control their blood sugar. The theory is that this approach will improve the quality of health care through both better prevention and more effective treatment.

Pay-for-performance is one of several models that measure and reward doctors and hospitals for the quality and cost of care they provide. However, challenges remain in implementing this system and collecting data to confirm its value.

The Center for Medicare and Medicaid Services and municipal health care systems like the New York City Health and Hospital Corporation have already adopted pay-for-performance programs. In the next five years, more than 85 percent of states expect to do the same, according to a report by the health care improvement organization IPRO.

“We believe these models will be a key component in creating a better quality, affordable health care system.”

Pay-for-performance programs have been in place for almost a decade. Only a handful of studies have looked at the programs, and those studies were limited and based on early models. The results show only modest bumps in efficiency and improved patient health. Are the new programs doing any better?

“Today’s programs have the potential to overcome some of the volume-based incentives in our current system,” said Laura Peterson, M.D., M.P.H., director of the Center for Innovations in Quality, Effectiveness and Safety at Michael E. DeBakey VA Medical Center. “But we need additional evidence.”

In a 2013 paper published in the Journal of the American Medical Association, Dr. Peterson and colleagues found that a bonus equal to just 2 percent of a doctor’s annual salary resulted in better results for patients. The effect, however, did not last.

“We stopped the incentive and waited a year,” Dr. Peterson said. “The performance had declined. I believe that happened because the incentives did not result in structural changes to health care delivery.”

Structural changes, such as funding case managers, changing work flow and using other payment models, could lead to more lasting results.

One challenge to studying pay-for-performance programs is that few hospitals have information systems that can collect the data needed to assess quality. “Without that support, you cannot study this in an accurate and valid way — and that undermines the program,” Dr. Peterson said.

Some insurers are investing to help providers. Insurers are offering technology to help doctors and hospitals gain the capabilities for the new data system support.

“We have invested over a billion dollars in health care technology and solutions to support and reward evidence-based care,” Elizabeth Curran, executive director of National Network Strategy and Program Development for Aetna, said. “During the last several years, we have helped to connect hospitals and physician practices so they can share clinical data to improve care. And we have seen success. We believe these models are a key component for creating a higher quality, more affordable health care system.”