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Relative Value Health Insurance And Pay For Performance For Insurers: Complements, Not Substitutes


September 19th, 2014

Background

The quest for value dominates contemporary health policy.  Value, properly defined, is not about cost-savings but about the balance of costs and health benefits — improving the average cost-effectiveness of health interventions.  In choosing which care is funded, insurers are a crucial but commonly neglected driver of health system value.

Insurers can increase health system value by covering fewer cost-ineffective interventions or covering more cost-effective interventions.  Perhaps the earliest attempt to reform insurance, managed care, attempted to pursue both goals, but by the time it was implemented it widely focused (or was perceived to focus) on cost-containment.

A recent insurance reform proposal, known as Relative Value Health Insurance (RVHI), received considerable attention, for instance, in The Upshot, The Incidental Economist, and Forbes.  RVHI enables insurers to reduce their contractual obligation to cover “usual and customary” care.  This and similar earlier proposals rely on the insurers’ natural incentive to cut costs.  Less well-covered, however, are proposals to alter the very incentives of insurers to improve health, which we will call “pay-for-performance-for-insurers” (P4P4I).

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Pediatric Asthma: An Opportunity In Payment Reform And Public Health


September 18th, 2014

Editor’s note: The post is informed by a case study, the third in a series made possible through the Merkin Initiative on Physician Payment Reform and Clinical Leadership, a special project to develop clinician leadership in health care delivery and financing reform. The case study will be presented on Wednesday, September 24 using a “MEDTalk” format featuring live story-telling and knowledge-sharing from patients, providers, and policymakers. 

The Clinical Challenge: A Chronic, but Manageable Illness

Asthma affects 7 million children – more than 10 percent of kids in the U.S. – and is the most common chronic childhood disease. Yet even with high levels of insurance coverage, 46 percent of pediatric patients have uncontrolled asthma. There are substantial gaps in appropriate prescribing and adherence to effective medications. In addition, a multitude of non-medical issues influence a child’s ability to control their asthma: low parental health literacy, poor quality housing, and environmental triggers such as pests, mold, and cleaning chemicals. As a result 800,000 kids visit the emergency department (ED) for asthma each year.

In 2007 (the latest year which data are available) the U.S. spent over $56 billion on asthma care, of which nearly $27 billion was spent on pediatric asthma. Medicaid is the primary payer for pediatric asthma related hospitalizations with 55 percent of the market. Better control may also mean lower medical costs, due to reductions in ED visits, admissions, and other health care utilization – patients with poorly controlled severe asthma cost nearly $5,000 more per patient per year compared to average pediatric asthmatic costs.

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ACOs, Bundled Payment Lead Health Affairs Blog August Most-Read List


September 12th, 2014

Posts on payment and delivery reform head the Health Affairs Blog top-fifteen list for August. Suzanne Delbanco and David Lansky’s post on accountable care organizations was the most-read post, followed by Tom Williams and Jill Yegian’s post on bundled payment, written in response to an article published in the August issue of Health Affairs.

Next is Health Affairs’ Editor-in-Chief Alan Weil’s post on the five engagements that will define the future of health, drawn from his keynote presentation at the 2014 Colorado Health Symposium. This is followed by Rosemarie Day and coauthors’ post on the private health insurance exchange system.

The full list is below.

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The Payment Reform Landscape: Non-Payments


September 4th, 2014

Throughout 2014 here on Health Affairs Blog, I have shared Catalyst for Payment Reform (CPR)’s insights on different types of payment reform, which run along a spectrum of financial risk. We began the year by examining payment models that have “upside only” risk, such as pay-for-performance, which give health care providers the opportunity for financial gain from improving care with no added financial risk.

Then we examined payment models that contain “two-sided risk,” like shared-risk arrangements for ACOs, bundled payment, and capitation with quality, where providers can reap financial gain as well as experience financial losses depending on care outcomes and expenditures.

This month, we examine a model that presents “downside only” risk — non-payment to providers. This payment strategy puts providers at financial risk for care that could or should have been avoided.

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Transcending Obamacare? Analyzing Avik Roy’s ACA Replacement Plan


September 2nd, 2014

Avik Roy’s proposal, “Transcending Obamacare,” is the latest and most thoroughly developed conservative alternative for reforming the American health care system in the wake of the Affordable Care Act. It is a serious proposal, and it deserves to be taken seriously.

Roy’s proposal is a curious combination of conservative nostrums (limiting recoveries for victims of malpractice), progressive goals (eliminating health status underwriting, providing subsidies for low-income Americans), and common sense proposals (enacting a uniform annual deductible for Medicare).

Most importantly, however, Roy proposes that conservatives move on from a single-minded focus on repealing the ACA toward building upon the ACA to accomplish their policy goals. He supports repealing certain features of the ACA—including the individual and employer mandate—but would retain others, such as community rating and exchanges. As polling repeatedly shows that many Americans are not happy with the ACA, but that a strong majority would rather amend than repeal it, and as it is very possible that we will have a Congress next year less supportive of the ACA than the current one, Roy’s proposal is important.

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The Winding Path To Effective Bundled Payment


August 28th, 2014

Tom Williams and Jill Yegian’s excellent blog post makes a great companion to our recent paper on the evaluation of the Integrated Healthcare Association (IHA) Bundled Payment Demonstration. Williams and Yegian offer lessons from their experience implementing a demonstration project that failed to meet its original objectives. This type of analysis is essential.

It’s not unusual for a demonstration to fall short of its original objectives. Learning from such cases is part of the innovation process. This is especially worthwhile for bundled payment, which has many potential benefits for patients, providers, and payers.

None of the barriers encountered in IHA’s demonstration signal a “death sentence” for bundled payment. However, the demonstration clearly shows that bundled payment is difficult to implement.

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The 125 Percent Solution: Fixing Variations In Health Care Prices


August 26th, 2014

Summer vacation’s finally here. You’re strolling along the beach, not a care in the world when – ouch – you step on a piece of broken glass and need a few stitches at the local hospital. Such routine procedures are painless enough, but depending on where you’re treated and by whom, the real pain could occur when you’re handed the ER bill.

In some of the latest evidence on the crazy-quilt patterns of U.S. health care prices, Castlight Health found prices in Dallas TX ranging from $15 to $343 for the same cholesterol test.  What makes these price variations particularly egregious is that the highest prices are typically reserved for those least able to pay, such as the uninsured.

What’s the solution?  In the long run, we need to establish a more transparent system where consumers can choose easily based on reliable quality and price measures.  But our current measures of quality are, to put it politely, inadequate, and people with insurance are often insulated or can generally afford those higher prices.  Reference pricing, in which insurance pays only enough to reimburse providers with adequate quality and relatively lower costs, would help to restrain high prices, but distracted patients or those with strong attachments to specific doctors or hospitals could still get stung with a big bill.

Capping payments at 125 percent of Medicare rates. We suggest a short-term solution: The federal Medicare program has in place a complete system of prices for every procedure and treatment.  It’s not perfect, but it is uniform across regions, with a cost-of-living adjustment that pays more in expensive cities and less in rural areas.  If every patient and every insurance company always had the option of paying 125 percent of the Medicare price for any service, we would effectively cap the worst of the price spikes.  No longer would the tourist checked out at the ER for heat stroke be clobbered with a sky-high bill.  Nor would the uninsured single mother be charged 10 times the best price for her child’s asthma care.  This is not just another government regulation, but instead a protection plan that shields consumers from excessive market power.

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The “Failure” Of Bundled Payment: The Importance Of Consumer Incentives


August 21st, 2014

Bundled payment for orthopedic and spine surgery and other major acute interventions has many attractive features, in principle. But implementation has been difficult in practice.  The recent Health Affairs paper by Susan Ridgley and colleagues, and the Health Affairs Blog commentary by Tom Williams and Jill Yegian, list quite a few practical implementation problems, and the points raised in both these pieces are well taken.

As leaders in the Integrated Health Association (IHA) bundled payment initiative, we shared the same hopes, devoted the same energies, and share the same frustrations with the modest results.  We feel it is important to emphasize what we consider to be the initiative’s most important design failure: the lack of engagement and alignment on the part of the consumer.  No one will ever reform the U.S. health care system without bringing the consumer along and, indeed, placing consumer choice and accountability at the very center of the reform initiative.

On an optimistic note, this design failure is being addressed by the larger health care marketplace in the wake of numerous failed attempts to reform health care by focusing exclusively on provider payment and incentives.

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Key Success Factors For the Medicare Shared Savings Program


August 21st, 2014

In January 2012 the Centers for Medicare & Medicaid Services (CMS) officially launched the Medicare Shared Savings Program (MSSP) for the formation of national Accountable Care Organizations (ACOs). Early participants were charged with bringing the theory of accountable care into practice.

Premier, a national healthcare improvement alliance of hospitals and health systems, created a population health collaborative in 2010 designed to assist providers with developing and implementing successful ACOs both in the public and private sectors.

Thus far, the Premier collaborative has advised nearly 30 MSSP applicants, and is working with another 30 more, on how to structure and manage an effective ACO. Through benchmarking tools, financial models, the sharing of best (and worst) practices, etc., members of the Premier PACT Collaborative have outperformed the national MSSP cohort.

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Hospital Readmission Reduction Program Reignites Debate Over Risk Adjusting Quality Measures


August 14th, 2014

Do safety net hospitals categorically under perform the national average in terms of managing readmissions? Or is something else triggering higher rates of readmissions in these facilities?  These questions are essential for policymakers to answer as pay-for-performance (P4P) penalties are having a disparate impact on hospitals that serve low-income areas.

Medicare’s Hospital Readmission Reduction Program (HRRP), for example,  links risk-adjusted hospital readmission rates to financial penalties. Hospitals with risk-adjusted readmission rates that fall below the national average are penalized by having their annual Medicare payments reduced by up to 2 percent. In 2015, hospital payments are scheduled to be reduced by up to 3 percent.

But the program’s current system for measuring readmission rates may be flawed. Numerous analyses have found that safety net hospitals, which care for low-income patients, are more than twice as likely to be penalized than hospitals caring for higher-income patients.

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Better Measurement Of Maternity Care Quality


August 12th, 2014

A thought-provoking paper published this month in Health Affairs shows stunning variation in rates of obstetrical complications across U.S. hospitals. This type of research is important and necessary because focusing on averages masks potentially large differences in how patient care is provided and how clinical decisions are made.

From a policy perspective, it’s crucial to identify and learn from hospitals that are “positive deviants,” that is – hospitals with better-than-expected quality of care. From a pregnant woman’s perspective, having information on hospital rates of hemorrhage, infection, or laceration during childbirth is a high priority.

Authors Laurent Glance and colleagues add to a growing literature on variation in hospital-based maternity care. Having useful quality measurement and reporting strategies to guide policy and patient decisions is an essential next step. Indeed, Glance and colleagues conclude by urging clinicians and policymakers to “develop comprehensive quality metrics for obstetrical care and focus on improving obstetrical outcomes.”

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An Evolutionary Approach To Advancing Quality Measurement


August 8th, 2014

The Medicare Payment Advisory Commission’s June report, like many current discussions on measuring quality in health care, focuses on the need for measures of overuse and outcomes.  The National Committee for Quality Assurance (NCQA) agrees and is committed to developing better measures for these important priorities.

NCQA’s Healthcare Effectiveness Data and Information Set (HEDIS), a tool used by more than 90 percent of America’s health plans to measure performance, includes a readmissions outcome measure, intermediate outcome measures like blood pressure and blood sugar control for diabetics, and measures of relative resource use.

MedPAC suggests focusing on important resource use outcomes, including preventable admissions, emergency department visits, mortality, and readmissions, as well as healthy days at home. These are important for helping us understand the costs of care.

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The Payment Reform Landscape: Accountable Care Organizations


August 5th, 2014

“The accountable care organization is like a unicorn, a fantastic creature that is vested with mythical powers. But no one has actually seen one,” said former California HealthCare Foundation CEO, Mark Smith, MD, in 2010. Over the last four years, we’ve certainly seen a proliferation of unicorns and we’re now reaching the point where fantasy—at least in a handful of cases—is becoming a reality.

A growing number of large employers are piloting accountable care organizations (ACOs), working through their health plan; in some cases they are doing so directly with provider systems, such as the new Boeing arrangement with Providence Health and Services, Swedish Health Services, and University of Washington Medicine and Intel’s contracting efforts in Albuquerque, New Mexico and Portland, Oregon. The large employers and other health care purchasers with whom we work — eager, if not desperate, for solutions to contain the costs of health care and improve its quality — are watching these first movers carefully to see if ACOs prove to be a viable strategy for improving population health and bending the cost trend.

These leading purchasers intend to set the bar high. They cannot make the investment to pursue these ACO relationships if they are not assured that their populations will see meaningful, measurable gains in their health care and its affordability, as well as their health. That often means contractual commitments to lowering total costs of care and showing improved patient outcomes for targeted populations — like high risk, medically complex patients. Our purchaser colleagues who have been among the early adopters of ACO arrangements have begun to identify the features critical to successful ACOs; these are the elements other purchasers will look for when deciding if it’s worth proceeding.

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Health Affairs August Issue: Variations In Health Care


August 4th, 2014

Health AffairsAugust variety issue includes a number of studies demonstrating variations in health and health care, such as differing obstetrical complication rates and disparities in care for diabetes. Other subjects in the issue include the impact of ACA coverage on young adults’ out-of-pocket costs; and how price transparency may help lower health care costs.

For mothers-to-be, huge differences in delivery complication rates among hospitals.

Four million women give birth each year in the United States. While the reported incidence of maternal pregnancy-related mortality is low (14.5 per 100,000 live births), the rate of obstetric complications is nearly 13 percent.

Laurent Glance of the University of Rochester and coauthors analyzed data for 750,000 obstetrical deliveries in 2010 from the Healthcare Cost and Utilization’s Nationwide Inpatient Sample. They found that women delivering vaginally at low-performing hospitals had twice the rate of any major complications (22.55 percent) compared to vaginal deliveries at high-performing hospitals (10.42 percent

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Disparities In Access To Palliative Care


July 30th, 2014

Editor’s note: Otis Brawley also coauthored this post. This post is part of a periodic Health AffairsBlog series on palliative care, health policy, and health reform. The series features essays adapted from and drawing on an upcoming volume, Meeting the Needs of Older Adults with Serious Illness: Challenges and Opportunities in the Age of Health Care Reform, in which clinicians, researchers and policy leaders address 16 key areas where real-world policy options to improve access to quality palliative care could have a substantial role in improving value.

Racial and ethnic disparities in health care have been well documented among minority groups with respect to access to care, receipt of care, and quality of care. As a result of these disparities, minority populations are often diagnosed with late stage illness and have inferior outcomes likely leading to increased suffering.

Little is known, however, about disparities in access to and use of specialty palliative care. Palliative care is medical care aimed at relieving suffering and providing the best possible quality of life for people facing pain, symptoms, and stresses from serious illness. Palliative care is appropriate for patients at any age or illness stage and can be provided along with curative or life-prolonging therapies.

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Revisiting Primary Care Workforce Data: A Future Without Barriers For Nurse Practitioners And Physicians


July 28th, 2014

Editor’s note: Debra Barksdale and Kitty Werner also coauthored this post. 

With the full implementation of the Patient Protection and Affordable Care Act (ACA), there have been major concerns about the looming primary care provider shortage. The National Center for Health Workforce Analysis predicts shortages as high as 20,400 physicians by 2020, and increases in medical school graduates entering primary care residencies have been anemic.

Physician shortages can be addressed by the rapid growth of nurse practitioners (NPs), trained in primary care, along with the redesign of primary care to include teams that can be led by both physicians and NPs. But our nation’s primary care needs can only be met if states allow NPs to practice to the fullest extent of their training without unnecessary requirements for physician supervision.

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Examining Medicare’s Hospital Readmissions Reduction Program


July 24th, 2014

New financial incentives and penalties in the Affordable Care Act (ACA) designed to optimize health care system performance are proving difficult to manage, but they are also providing new opportunities for leaders to foster collaboration between acute and post-acute health care providers.

Perhaps one of the most promising, albeit controversial, programs has been Medicare’s Hospital Readmissions Reduction Program (HRRP), which penalizes hospitals with excess 30-day readmissions for health conditions such as pneumonia, myocardial infarction, and heart failure. Although not all hospital readmissions are preventable, many could be avoided with improved post-discharge planning and care coordination.

The HHRP was designed to penalize hospitals with excess 30-day readmissions regardless of whether the patient was readmitted to the same hospital or another hospital. Although there are some exceptions (for example, readmissions due to hospital transfers or planned readmissions), most readmissions of patients with health conditions targeted by the HHRP will count against a hospital.

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Empowering Patients As Partners In Health Care


July 24th, 2014

Recently, the National Patient Safety Foundation’s Lucian Leape Institute brought together 40 patient safety experts — health professionals, patients, advocates, and others — to develop recommendations for how best to engage patients and families in improving patient safety. They represented patient advocacy organizations, health systems, professional societies, researchers, and international safety organizations.

During the course of two lengthy roundtable discussions, participants were asked to reflect on an experience in which they or someone close to them had experienced harm at the hands of the health care system and how they responded. Among the stories we heard:

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Shifting Motivations: Rethinking Primary Care Physician Incentives In Health IT Implementation


July 21st, 2014

Clinician adoption and implementation of health information technology (IT) has increased significantly since the passage of the HITECH Act in 2009. Dedicated efforts and large financial incentives have spurred innovation and motivated progress in many aspects of information technology, including information exchange and community-level health IT implementation. Yet poor usability of systems and overwhelming reporting burden still present barriers to optimal use of health IT.

Health IT capabilities — such as automated performance feedback; shared documentation with patients; population health tools; and clinical decision support, facilitating evidence-based health care — can potentially drastically improve quality of care, particularly in primary care practices. However, the current incentive and payment structures are not aligned with productive use and spread of health IT innovation. When many primary care physicians use electronic health records (EHRs), the problems they are now tasked to solve relate to billing and coding compliance and to achieving “meaningful use” through the Centers for Medicare and Medicaid Services (CMS) EHR Incentive Programs; many clinicians and systems are not encountering or using EHRs as productive clinical tools.

Perhaps the focus of providers and health systems on meeting the technical and administrative requirements of “meaningful use” has obscured the creative opportunity for clinicians to explore how to use EHRs to improve care, and to see their own actions as part of the solution to effective implementation. Strategies that focus on creating space for discovering ways that IT can support effective health care — e.g., more flexible payment models with emphasis on population health outcomes — may be more successful than those that focus on health IT adoption.

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Positive Results For 2012 Physician Quality Reporting System And eRx Program


July 17th, 2014

In April, the Centers for Medicare & Medicaid Services (CMS) released the 2012 Physician Quality Reporting System and Electronic Prescribing (eRx) Experience Report, showing a significant increase in participation in two programs that allow eligible professionals to earn incentive payments through voluntary participation.

Record Participation in 2012

With over 430,000 professionals participating in the Physician Quality Reporting System (PQRS) and more than 340,000 e-prescribing, the 2012 report marks encouraging progress in efforts to improve quality measurement and reporting through the PQRS and eRx programs. Thanks to increased participation, more clinicians are actively measuring and reporting on quality and focusing on improvement.

CMS is beginning to add this information to Physician Compare, a website that can be viewed by patients. Measuring, transparently sharing, and improving quality performance provide the keys to a better health system.

At CMS, we are pleased by the success of these programs and other CMS quality measurement programs. We are also encouraged by the potential of these initiatives to empower patients and providers with information that can support care coordination and improved delivery of care.

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