Health Affairs

Performance measurement — if done right — can be a core activity to move the health care system to higher value for the American public, while rewarding health professionals and health care institutions for doing the right thing for their patients. Yet, policy makers, private and public, have a duty to the public, patients, and providers to get it right — to measure and report accurately and meaningfully.

Harlan Krumholz and Peter Pronovost have been among the most important contributors to the development of performance measures for quality and safety of health care. At the same time, each has written powerful critiques of particular aspects of the current measurement enterprise with suggested improvements. I work mostly inside the Beltway in a world of policy makers who, despite good intentions, by their actions often display a lack of understanding of the challenges associated with measures, measurement, public reporting, and pay-for-performance. For example, the physician value-based modifier, which was mandated as part of the Affordable Care Act and now must be implemented by CMS, cannot produce a valid snapshot of an individual physician’s “value” but will be imposed nevertheless, unfortunately feeding those within the physician community who resist all efforts to improve accountability and transparency of performance.

With the encouragement of the Robert Wood Johnson Foundation, Harlan, Peter, and I joined in a collaborative endeavor to produce a comprehensive look at the state of play of performance measurement and public reporting — their conceptual underpinnings and limitations, successes and failures, and, perhaps most importantly, recommendations for major steps that are needed now to put the measurement enterprise on track to achieve its potential to improve the value of U.S. health care without doing harm.

The Affordable Care Act survived the Supreme Court and a presidential election, so why does it face such an uncertain future? One reason is that it was essentially silent on how to control costs. This has led many pundits — including the likes of Paul Krugman and Robert Reich — to argue that the best approach would be to extend Medicare to everyone. A January National Research Council report on the relative disadvantage of America in global health outcomes, especially compared to countries with national health insurance, added further fuel to the fire. But is a larger government role in health insurance the best approach?

The idea of universal Medicare is powerful and attractive. Mr. Krugman points out that in the last forty years, average Medicare costs per person have grown by 400 percent while those for private insurance have increased more than 700 percent. His numbers suggest that if everyone had Medicare for the last 40 years, we might now spend only 14 percent of GDP on health care instead of nearly 18 percent, while also reaching universal coverage. Mr. Reich argues that “Medicare-for-All” would save between $58 billion and $400 billion annually, and similarly concludes: “Medicare isn’t the problem. It’s the solution.” Critics of the U.S. system are also quick to point out that Americans don’t live as long as their counterparts in countries that spend much less, suggesting universal Medicare could save money and improve our health.

The argument for universal Medicare basically comes down to three key claims: (1) Medicare gets lower prices, (2) Medicare’s administrative costs are lower; and (3) Greater spending does not mean better health. Each of these deserves closer attention.

Much has been made of the slowdown in health spending growth and the role played by the economy. I have to confess that my first take, after studying plots of business cycles and health spending, was that health spending “had a mind of its own” and paid no attention to business cycles. Consider the two most recent recessions depicted in the chart below. During the recession of 2001, health spending growth actually shot up at the same time that the growth in gross domestic product (GDP) was dropping, and continued to rise even after the recession officially ended.

During the Great Recession, spanning December 2007 through June 2009, the growth in health spending dropped by about 2 percentage points and then leveled off while GDP growth dropped by nearly 10 percentage points and then quickly rebounded to a more normal long run rate of growth (though not sufficient to make a large dent in unemployment). I hope you can see why I was skeptical of a predictable relationship.

Following the third straight year in which the Centers for Medicare and Medicaid Services estimated the growth in national health expenditures to be a record-low 3.9 percent, considerable speculation on the causes of slower spending growth has come from a variety of sources. There seems to be a consensus among actuaries, academics, and other analysts that the recession and the associated increase in unemployment and decline in insurance coverage led individuals to cut back on their use of health care services. (See here, here, But, while the recession is clearly associated with the dramatic slowdown in spending growth from 2007-2009, there is also evidence that the slowdown in spending preceded the recent recession and seems to be continuing during the modest economic recovery.

Observers of this more general trend have begun to suggest that fundamental structural changes in the health system are playing a role in recent spending trends. The ability of some high profile providers and health systems to achieve high quality outcomes with greater efficiency has garnered a lot of attention and some suggest that more salaried employment of physicians could be altering the practice patterns that developed under a fee-for-service system. Others have pointed to patient-centered medical homes, accountable care organizations, and other payment and delivery system reforms as potential contributors to the slowdown in spending growth. The Obama administration has also argued that the Affordable Care Act has started to have a moderating effect on spending growth.

The extent to which the economy versus broader systemic changes has been driving slower spending growth has enormous implications for forecasting future spending trends. If the economy has been the primary driver of recent trends, we should expect spending growth to return to historically high levels as the economy recovers. The Congressional Budget Office (CBO) and the CMS actuaries have revised their Medicare and Medicaid forecasts downward to reflect the latest trends, but both entities seem to suggest that spending growth over the long term will return to historical levels. If, however, more structural changes are at work, then perhaps there is reason to be hopeful that health care spending growth will continue at a rate much closer to the rate of growth in the economy.

In a publication released in numerous states as well as a JAMA Forum article and a recent list of ten supposed “myths” about Medicaid expansion, the Heritage Foundation repeatedly cites our paper for the proposition that “40 of 50 states are projected to see increases in costs due to the Medicaid expansion,” and that expansion would force such states “to dig deep into their already overstretched budgets.” Even in the 10 remaining states, according to Heritage, the budget gains we projected to result from expansion were speculative and uncertain, since they supposedly relied on states cutting payments for hospital uncompensated care.

These claims distort our work. We identified 10 states in which Medicaid expansion would yield net savings based on just one factor—namely, unusually generous prior Medicaid coverage, for which states could claim enhanced federal matching funds. The modest additional gains resulting from uncompensated care savings did not tip any state from the red into the black.

Medicaid Expansion Offers Budget Savings, Revenue, and Economic Gains to States

More importantly, Heritage ignored our explanation that, because we were limited to “data available for all 50 states and the District of Columbia, we were unable to estimate several potential sources of state fiscal gain;” and that if additional, state-specific factors were considered, “many more states could realize net fiscal gains.” Nor did Heritage acknowledge that all states must pay for national health reform but only those that expand Medicaid will receive large, offsetting allotments of federal Medicaid dollars, with resulting economic activity, jobs, and state revenue.

There is a growing consensus that the regulatory system for research is in need of reform. Established 21 years ago by the Common Rule, it has functioned via a rigorous environment to assure that risk in research is dealt with and transparency maintained.

The trigger for these regulations is a definition of research as a “systematic investigation…designed to develop or contribute to “generalizable knowledge.” When this definition is satisfied, an intensive set of requirements ensues including review, approval, and continued oversight by an Institutional Review Board (IRB); reporting requirements;, the necessity for informed consent (often highly complex); and other administrative components. If projects are not “generalizable,” (e.g., local hospital programmatic or quality review), they fall strictly under healthcare system purview rather than under Common Rule regulatory oversight.

The current system has a strong moral imperative and has been critical to mitigating risk for research subjects and providing transparency. However, it is burdensome and fails to take into account the considerable progress made in both the research and clinical enterprises over the last few decades: in research, technological advances in generating data on routine care, and in healthcare, much more stringent oversight.

Editor’s note: The February issue of Health Affairs was a thematic issue focused on patient engagement. In conjunction with the Patient-Centered Outcomes Research Institute (PCORI), the journal launched a new initiative inviting questions from patients and others via Facebook for Health Affairs authors on patient-centeredness and patient engagement. Questions are then answered on Health Affairs Blog.

Below, Benjamin Moulton, the senior legal adviser at the Foundation for Informed Medical Decision Making, answers a question from a reader. In the February issue (writing with Jamie King) and at the issue release event, Moulton described the results of the Group Health Demonstration Project; under a Washington State legislative mandate, Group Health studied the costs and benefits of integrating shared decision making and decision aids into clinical practice across a range of conditions for which multiple treatment options are available. Previously, Ming Tai-Seale, Jessie Gruman and Rachael Fleurence answered questions from readers.

Joan DeClaire: Thanks for a great description of how shared decision making is working within Group Health Cooperative, an integrated health system. Do you think it will take off in other kinds of health care settings? And if so, what will be the catalyst?

Poorly manufactured and fraudulent medicines kill thousands of people around the world each year. For infectious diseases like malaria and HIV, shoddy medicines also accelerate drug resistance and dramatically alter the course of epidemics. With few new drugs under development, recent progress against these major killers in the poorest countries is precarious.

Bad drugs have become a big problem for one major infectious disease in particular: tuberculosis. If we don’t solve this issue, we may see the gains we’ve made against TB slip away.

According to the World Health Organization, global TB cases continued on a slow downward trend in 2011. While this is good news, the disease still claimed 1.4 million lives that year—more than any other infectious disease except HIV/AIDS. Meanwhile, multidrug-resistant TB cases rose to 630,000 worldwide. Resistant TB is deadly and costs significantly more to treat. For example, curing a single case of it in the United States can cost more than $200,000. Treatment takes two years, and the side effects can be severe, including nausea, vomiting, joint pain, and even hearing loss.

Editor’s note: The February issue of Health Affairs was a thematic issue focused on patient engagement. In conjunction with the Patient-Centered Outcomes Research Institute (PCORI), the journal launched a new initiative inviting questions from patients and others via Facebook for Health Affairs authors on patient-centeredness and patient engagement. Questions are then answered on Health Affairs Blog.

Below, Ming Tai-Seale of the Palo Alto Medical Foundation Research Institute answers a reader query; previously, Jessie Gruman and Rachael Fleurence answered questions. Watch for a Health Affairs Facebook post tomorrow inviting questions for Benjamin Moulton of the Foundation For Informed Medical Decision Making.

Paul Gionfriddo: Ming, you’ve concluded both that we need a better system of communication between clinicians and patients with less variation in clinicians’ responses and that clinicians appear to be out of their comfort zone communicating with patients about mental health concerns. Would you argue that more universal use of screening tools like the PHQ-9, coupled with better training of primary care clinicians about how to interpret results, respond to patients, and refer (via collaboration to or integration with) behavioral health professionals would create more effective give-and-take with patients and address some of the issues you raised in your paper?

Ming Tai-Seale: Thank you, Paul, for your thoughtful question. Indeed, the United States Preventive Services Task Force (USPSTF) has recommended that screening adults for depression be done in clinical practices that have systems in place to assure accurate diagnosis, effective treatment, and follow-up.

The April issue of Health Affairs, released today, examines how all high-income countries are struggling to achieve the “Triple Aim” — better health and better health care at lower cost. The articles in this issue find that the United States and other high-income countries have much to learn, with the “trade” in strategies and tactics likely to flow both ways.

Join us on Thursday, April 11, for a briefing on the April issue. Support for the new Health Affairs volume was provided by The Commonwealth Fund, Britain’s Nuffield Trust, and the Institute of Global Health Innovation at Imperial College London.

Drug Payment And Pricing — How Do US Practices Compare With Other Countries?

A featured study by Panos Kanavos of the London School of Economics and Political Science and coauthors compared prescription drug prices among selected countries that are members of the Organization for Economic Cooperation and Development in 2005, 2007, and 2010. Depending on how prices were adjusted for the volume of drugs consumed in the various countries, drug prices in the United States were between 5 percent and nearly 200 percent higher than in the other nations studied. A key contributing factor is that the United States takes up new and more expensive prescription drugs faster than other countries. The authors recommend that the United States require pharmaceutical manufacturers to provide more evidence about the value of new drugs in relation to cost before use of such drugs is reimbursed.

In today’s Q and A on Patient Engagenment, we feature Rachael Fleurence, a Senior Scientist at PCORI where she leads the research prioritization initiative to help identify important patient and stakeholder generated questions and establish a rigorous research prioritization process to rank these questions. (Also, check out her recent blog post and follow the link to her February Health Affairs article here.)

You are invited to join us on Wednesday, April 11, when Health Affairs will hold a briefing to discuss its April 2013 issue, “Triple Aim Goes Global.”

The April issue examines how all high-income countries are struggling to pursue better health, better care, and lower cost – and to bring all of these goals into alignment. The issue received funding support from The Commonwealth Fund, the Nuffield Trust, and Imperial College London.

The briefing will take place at the Barbara Jordan Conference Center at the Kaiser Family Foundation, 1330 G Street, NW, in Washington, DC, on Thursday, April 11, 2013, 8:00 a.m. – 12:30 p.m.

Medicare is poised to revise its “coverage with evidence development” (CED) policy, which has important implications for beneficiaries’ access to new medical technology as well as manufacturers’ reimbursement for their products.

For years, Medicare has employed CED, under which the program provides conditional coverage for new technology while it collects additional evidence on the technology’s effectiveness. The concept has great intuitive appeal in that it promises to provide access to promising technology for which the evidence base may be immature. As Medicare officials and other experts have argued, by linking coverage of new technologies to requirements that patients participate in registries or clinical trials, CED can help identify the circumstances in which patients are most likely to benefit and potentially accelerate access to innovations.

Though Medicare has experimented with conditional coverage policies since the 1990s, the formal CED designation and its characterization date to two guidances the Centers for Medicare and Medicaid Services (CMS) issued in 2005 and 2006. CMS has used CED in 19 cases over the years on diverse technologies, including lung volume reduction surgery, implantable cardioverter defibrillators (ICDs), and positron emission tomography (PET) for cancer. (See Table 1 at the end of the post, click twice to enlarge.) The CED policies have varied in their data collection requirements, with some featuring randomized controlled trials and others relying on patient registries or other data collection strategies

A Health Affairs Web First article released today describes the new rapid-cycle approach to program evaluation at the recently established Center for Medicare and Medicaid Innovation. The Affordable Care Act created the Innovation Center within the Centers for Medicare and Medicaid Services (CMS) to test payments and service delivery models, reduce costs in Medicare and Medicaid, and improve quality.

As the Innovation Center moves ahead with innovative payment and service delivery models, the Rapid Cycle Evaluation Group at the center delivers frequent feedback to providers while evaluating the outcomes of each model tested. When a model is considered for testing, staff from the Rapid Cycle Evaluation Group and CMS’ Office of the Actuary are immediately assigned to help create the model. The Office of the Actuary provides timely and impartial actuarial, economic, and statistical estimates–and monitors Innovation Center initiatives once testing has begun. This group’s rigorous and speedy assessment and evaluation is driven by performance metrics and robust new methodologies.

Researchers from the evaluation group have also been organized into “affinity groups” and use CMS data to answer critical policy questions that may shape future payment and service delivery models. The Innovation Center also plans to identify and promote population health metrics–measures of the functional status, healthy behavior, and health outcomes of a population–to promote disease prevention and achieve a more accountable, equitable, and coordinated health care system. All these efforts will contribute to the Innovation Center’s success in carrying out its mission of improving the quality of care combined with the slowing spending growth.

For those of you who enjoyed the Q and A with Jessie Gruman last week, we’ll post the next in our series with patient advocates next week. This time our featured advocate will be Rachael Fleurence, a director at the Patient-Centered Outcomes Research Institute (PCORI). To learn more about her work and recent Health For those of you who enjoyed the Q and A with Jessie Gruman last week, we’ll post the next in our series with patient advocates next week. This time our featured advocate will be Rachael Fleurence, a director at the Patient-Centered Outcomes Research Institute (PCORI). To learn more about her work and recent Health Affairs article, visit this blog by Dr. Fleurance’s on PCORI’s website.

Now is your chance to ask questions of Dr. Fleurance.


Just go to Health Affair’s facebook page and post your question. We’ll post the answers on Health Affairs’s blog early next week.

The “fiscal cliff” deal raised taxes on households earning more than $450,000 a year and sheltered everyone else from an automatic income tax increase. Tough decisions about spending were put off until March 1, the new deadline by which Congress must take deficit-cutting action if it is to avoid automatic across-the-board sequestration cuts.

As both sides return to the negotiating table, one of the biggest bones of contention is what to do about entitlement spending, particularly Medicare. Many Republicans want to raise the age of Medicare eligibility to 67. President Obama and congressional Democrats do not.

It will be difficult, if not impossible to meet a reasonable fiscal target without addressing federal health care spending. However, the current fight is misplaced. The health care “entitlement” we need to reform is the notion that America’s health care system is entitled to an ever-growing share of America’s wealth.

The National Bureau of Economic Research (NBER) is organizing a conference on how organizational structure, management practices, and related innovations affect the costs, cost-effectiveness, and outcomes of health care, focusing on the hospital industry and health systems that have hospitals at their core. The organizers of the two-day conference, which will bring together economists, physicians, and policymakers, are Amitabh Chandra, David Cutler, Robert Huckman and Elizabeth Martinez.

Completed papers or detailed outlines and abstracts for potential presentation at the conference may be uploaded here. Papers, outlines, or abstracts must be submitted by February 28, 2013; authors will be notified about whether their paper has been included on the program by March 15, 2013. Accepted papers will also be invited for submission to a special issue of Health Affairs. Questions should be directed to confer@nber.org.

Over at the Healthcare Talent Transformation blog, Peggy Salvatore hosts a Valentine’s Day edition of the Health Wonk Review. Among the posts Peggy highlights is David Rothman’s Health Affairs Blog essay on patient engagement and Americans’ deep-seated fondness for medical treatments and tests, even when they are not supported by the evidence.

The pharmaceutical drugs developed over the past two decades have helped us more effectively manage, and in some cases dramatically change, the outcomes of patients with hypertension, high cholesterol, diabetes, and even some cancers. Increasingly, though, the stroke of a prescription pen doesn’t solve all patient problems. Nor does it solve the problems in our health systems.

To really fulfill the potential of health care, we need patients who are engaged, patients who take “actions (as) individuals … to obtain the greatest benefit from the health care services available to them.” (See Exhibit one below, click to enlarge)

Leonard Kish recently called patient engagement “the blockbuster drug” of the century. It’s an exciting idea and an apt label that raises an interesting question: what would an “engagement pill” actually look like?

Editor’s note: For more on the attitudes of Americans toward medical care and empowering patients to be active participants in their own care, see the February issue of Health Affairs, “New Era Of Patient Engagement.”

The attention now devoted to defining the proper role of patients and consumers in clinical decision-making is unusual, both in terms of who is addressing the issue and the intensity of the concern. Once, it was physicians and bioethicists who took the lead; now it is health policy analysts and health care administrators. Their aims go well beyond improving doctor-patient communication or promoting patient autonomy. The primary goal is to enlist patients in the effort to bring fundamental change to health care delivery.

The obligations conferred upon or assumed by patients have changed dramatically over the past half-century. Well into the 1950s, prevailing norms reflected Talcott Parsons’ formulation of the sick role. Patients were duty-bound to seek medical care when ill and follow physicians’ orders. In the 1970s and ‘80s, the new field of bioethics successfully challenged this paradigm, demanding that physicians obtain patients’ informed consent for all interventions, particularly in end-of-life decision-making.

Current expectations are different, less concerned with bioethical principles like autonomy and more committed to the idea that unless patients are genuine partners in medical decision making, altering the health care delivery system is not likely to succeed. The goal is not to advance patient rights but to transform patterns of care.