HMO's are currently embracing "pay for performance"

Quality of Care
August 5th, 2008
by Nick Jacobs

When the word quality was discussed back in the 80's, you often heard of the Baldridge Award or TQM, total quality management, as the programs that would take your organization to new heights. Today, more often than not, we hear about the Toyota Model of management or a more dated Six Sigma, 99.999999% approach to perfection. Recently, though, the government has taken over the quality quest in health care to push this industry to achieve levels of perfection.

U.S. medicine is about to launch into a new world order that will functionally save the government money, but will it produce quality? Of course, when it comes to life and death issues, there is no question that we must strive toward perfection, but when it just comes to human beings attempting to function in this very competitive environment, the game change causes casualties for both the providers and the patients.

The Government is taking a three-pronged approach to improve quality in health care:

1. They are pushing quality through public reporting. 2. Enforcing quality through the False Claims Act. 3. Incentivizing quality through payment reform.

Senator Chuck Grassley is quoted as saying, "Today, Medicare rewards poor quality care. That is just plain wrong, and we need to address this problem." HMO's are currently embracing "pay for performance" plans for physicians and hospitals. Medicare is introducing value based purchase plans and is proposing the linking of quality outcomes to physician payments.

As I have written before, hospitals will no longer be paid for hospital acquired conditions. That seems like a rather simple fix, but to appropriately determine if the condition was not acquired at the hospital, extensive testing must be added pre-admission at considerable costs to the hospitals. These additional unrecompensed costs be balanced by having fewer employees per patient, less updated equipment, and less flexibility to use more expensive drugs, but it will determine if your infection was present upon admission.

James G. Sheehan, Medicaid Inspector General of New York said, "We are reviewing assorted sources of quality information on your facility to see what it says and if it is consistent. You should be doing the same."

The spoken goal is to work toward perfection, but the underlying goals are also directed toward the financial implications. The public reporting of quality of care is intended to: correct inappropriate behavior; identify over payments, or deny payments altogether.

The False Claims Act, on the other hand has more draconian goals. When asked how he viewed the False Claims Act, Kirk Ogrosky, Deputy Chief for Health Care Fraud said, "You will see more and more physicians going to jail." Just what we need when there aren't enough docs to go around now.

Will these changes improve health care delivery? For the patients who can find the few docs and hospitals that will be left, there may be some improvement, but my personal opinion is that it will break the back of an already broken system and force more small and mid-sized hospitals out of business.

I recently had a conversation with a young medical computer specialist who took care of physician practices. He said, "Doctors and hospitals haven't figured it out yet, but they are simply becoming data entry centers for 'Big Brother' as the facts and figures are accumulated to be used against them in any manner that the payers may decide."

Maybe this is all too complicated to get our arms around, but if there are 78 M Baby Boomers and the Medicare Trust Fund is heading toward bankruptcy, then we probably will see every rule in the book being applied to keep from paying hospitals and doctors. There will simply not be enough money to go around.

Is that quality? Will these initiatives improve health care?

Prevention, wellness, optimal healing environments, and systems approaches to health and wellness will improve healthcare. Improvement will not come from the new rules that are unfolding. They may save some money, but how many lives?