The Intangibles— Why Paying Paying for Performance Won’t Work

The new buzz phrase in health care delivery is paying for performance, which is the method of tying reimbursements to outcomes. What this formula doesn’t adequately take into account are the intangibles: The efforts, skills and devotion of the providers, the unpredictability of the science and the patients’ comfort level during the process.

Provider efforts are influenced by costs, availability of resources, liability concerns and reimbursement levels. Skills are directly tied to differences in the level of training and experience of the providers— physicians, nurse practitioners, chiropractors etc. The most difficult to quantitate is the providers’ devotion to the patients versus devotion to the ‘system.’

In this era where the delivery of health care tends to focus on the bottom line, the fact that medicine is the science of disease is often forgotten. With advances in the science, the unpredictability of outcomes decreases, but it will never drop to zero. More efficient utilization of health care dollars and resources should be a goal, just not the goal.

The comfort level of the patient is elusive and the most difficult to put a dollar figure on. It not only includes physical pain and suffering, but also the ‘peace of mind’ that the patient is not just a number and a sense that their care is not being compromised in order to ‘balance the budget.’

If the goal is the least morbidity at the lowest cost, how is that measured? Readmission rate? Length-of-stay? What other factors could affect these outcomes— genetics, concomitant medical problems, age, patient compliance, resources, etc? There appears to the assumption by many of those who make the rules and pay the bills that expenditures can be reduced until a point is reached that potentially affects outcomes in a negative way. The example being the decreasing reimbursement rates in the Medicaid program that often leads to longer waits for therapy and frequently by less qualified providers. Who suffers? The patients!

It first started with the private insurance companies telling their policy-holders how much they would reimburse a patient for a particular service. Then it graduated to when Medicare and Medicaid first started dictating reimbursement levels to their providers. Then Medicare and the payers under managed care teamed up to create length-of-stay guidelines and ‘bundling’ of charges. Now that the Accountable Care Organizations (ACOs) seem to be the future under the Obamacare model, all the parameters are coming together for a delivery system that is more efficient based on costs balanced against outcomes.

ACOs must be able to alter their providers’ practice patterns to be more cost efficient. This can only be done by linking their reimbursements to established practice guidelines (practice parameters) or incentivizing providers to be more fiscally efficient, as in capitation models. The concerns are two: The threat of liability if these practices violate community standards. Even more important, the loss of the providers’ ability to incorporate their own clinical judgment into the decision making process. Essentially the providers are being ‘disenfranchised’ from their patients.

“The superiority of subjective measures may also explain why private medicine, where peers, patients and professional associations subjectively evaluate a physician’s value-added does a better job of providing quality care than the quality measures adopted in national systems run by governments,” writes Linda Gorman in her blog, What’s Wrong with Pay for Performance?” February 13, 2013.

If the goal is to generate the least costs to make the correct diagnosis and then prescribe the least costly therapies to attain the best medical outcomes, that usually implies reimbursing the providers, hospitals, drug and medical equipment companies at the lowest level possible. Even today, using less qualified providers when ever possible is already becoming the norm.  But who is qualified to make those determinations— the Feds, the payers, the state legislatures?

The answers appear to raise more questions than answers. The group that is the most qualified to deal these difficult decisions is the providers themselves, particularly the physician community. Instead, they are often relegated to the sidelines, only to be called on when their support is needed around election time.

In his blog, Paying for Care, March 11, 2013, John Goodman writes, “The people who are on the supply side of the market have more information and better insight than the people on the buyer’s side. That’s why successful reform needs to start with the people who practice medicine, not with the people who buy their services.”

If paying for performance is to become the benchmark for health care delivery, other questions arise. Does this system allow for further diagnostics and therapeutics that might add value or prolong patients’ lives even though the odds for success are not likely?  Is everything that deals with heath care delivery going to come down to cost/benefit ratio? Are there options to ‘buy one’s way out’ of the delivery system (more tests, more expensive therapies)?

Although the delivery systems in England and Canada base control of total costs by limiting resources and reimbursements to providers, a comparison of their outcomes to this country’s is revealing. A report in Investor’s Business Daily released the following survey results: The per cent of men and women surviving a cancer five years after diagnosis was 65% in the US, versus 46% in England and 42% in Canada. The percentage of patients diagnosed with diabetes who received treatment within 6 months was 93% in the US, 15% in England and 43% in Canada. The percentage of seniors needing hip replacement who received it within 6 months was 90% in the US, 15% in England and 43% in Canada. The percentage of patients referred to a medical specialist who see one within 1 month is 77% in the US, 40% in England and 43% in Canada. Finally, the number of MRI scanners per million people in the US is 71, 14 in England and 18 in Canada. If these findings tell us anything, it is that the delivery system in this country is more convenient (shorter wait times and less morbidity at the least). More important, the current system in the US probably produces better outcomes (performance) if the statistics on cancer survival hold up across the board.

It is sadly ironic that the advances in health care that allow for longer, more productive lives are projected to be limited in the elderly because the resources have a better cost/benefit ratio in the younger population.

Paying for performance might also appear to demonstrate an apparent lack of trust by the regulators and the payers that the medical community will only function efficiently if regulated to do so. This ‘free-rein’ approach is a potential flaw in the fee-for-service system. But does that concern justify attempts to dismantle, what is considered by most as the word’s best health care delivery system?

Is the goal a ‘bare bones’ delivery system that just scrapes by doing the least, caring the least and trusting the least? Or is it the more noble aspiration of the most efficient use of the limited health care funds and resources? Sometimes it seems our elected representatives and the payers get those priorities confused.

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