ON THE AGENDA | FEBRUARY 11TH, 2015 | Allison Rizzolo

Paying for Quality over Quantity in Health Care: Why the Public Ought to Be Engaged

Engaging hospitals and doctors is crucial to making payment reform work for Medicare, and to proving to private insurers that it can work for them too. It's to policymakers' advantage to include patients in the conversation about payment reform as well.

In late January, the Obama administration announced a plan to drastically change the way Medicare reimburses doctors and hospitals for health care services.

Traditionally, Medicare has paid providers using a fee-for-service model. In this model, doctors and hospitals receive payment based on the number of services they provide – surgeries performed or tests administered, for example.

The White House is proposing a move toward a performance-based model in which doctors and hospitals are paid based on the quality of their service. In short, they will be paid more if patients get healthier and less if patients stay sick.

This experiment may encourage other payers to change the way they reimburse providers as well. As Jason Millman noted on Wonkblog, "Because Medicare is such a huge part of health care spending, the hope is that these changes will trickle out to doctors' offices and hospitals across the country."

In health policy wonk circles, changing the way doctors and hospitals are paid is called payment reform. It's one of several approaches experts have proposed to help bring down the cost of our country's health care system. (Costs are soaring: we paid an average of $8,917 per person for health care in 2010, up from $4,878 just a decade earlier.)

National Health Expenditures Per Capita, 1960 - 2010

Source: CMS, "Table 1. National Health Expenditures; Aggregate and Per Capita Amounts, Annual Percent Change and Percent Distribution: Selected Calendar Years 1960-2011," http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/tables.pdf

It's clear we need to do something, but any approach to bringing down costs, including payment reform, raises many complex and difficult questions. In the case of performance-based payment reform, the most important is: How do we measure quality in health care?

This is a difficult question to answer in any sector, and policy and decision makers have certainly stumbled on measuring quality before. Take teacher quality, for example, an issue close to my own heart. When re-vamping teacher evaluation systems, states and districts often did not include the educators and administrators on the ground in decisions. Now, many states and districts not only have to go back to the drawing board, they also have to rebuild frayed relationships and trust.

Engaging hospitals and doctors is crucial to making payment reform work for Medicare, and to proving to private insurers that it can work for them too. It's to policymakers' advantage to include patients in the conversation about payment reform as well. This is particularly important now, as the public is, for better or worse, taking on more and more responsibility as consumers of health care.

Is the Public Capable of or Interested in Discussing Health Care Costs and Policy?

Health care experts often posit that issues like payment reform are too technical, complicated or dry for the public to be interested in or engage on. Many doubt this information will be that useful to the public, particularly as insurance shields the public from the true costs of their care. As we've asked before, would patients necessarily be aware that their physicians are being paid differently? And would they even care?

We posit that the public IS interested in this topic and CAN become a meaningful partner in decisions around reforming the health care payment system specifically and lowering health care costs generally.

We recently conducted focus groups, in partnership with the Kettering Foundation, with insured and uninsured Americans, 40 to 64 years old. Participants deliberated together over the pros and cons of several approaches to bringing down health care costs.

When given the opportunity to learn about and deliberate over various policy proposals, participants in these focus groups became not only willing, but eager to consider complicated approaches for containing health care costs, including performance-based payment reform. And they did so thoughtfully and civilly.

What the Public Has to Say about Performance-Based Payment Reform

At the beginning of the conversation on payment reform, most participants were not aware of the way in which doctors and hospitals are reimbursed. When we explained the current fee-for-service structure, participants said that this helped them understand why they had so often been subject to care that they described as overly aggressive.

It's to policymakers' advantage to include patients in the conversation about payment reform.

They were eager to explore how reforming the way in which doctors and hospitals are paid would affect their own care. Participants felt payment reform could prevent doctors from over-testing and over-treating to make more money.

But they also expressed some reservations. Many were concerned that physicians would retaliate by skimping on care. As a man in New Jersey said, "I bet you the doctors won’t like it."

Participants were more cautious when we talked specifically about performance-based payment reform. (Some payment reform proposals suggest approaches where payment is not necessarily tied to patient health outcomes, recovery rates or satisfaction.) Some reasoned that financial incentives for improved patient outcomes would encourage doctors to work harder.

However, the conversation did identify some red flags:

  • Participants worried doctors would figure out how to game the system if their payments were based on performance. For example, doctors could coerce patients into giving them higher satisfaction scores.
  • They also worried doctors would turn away sicker patients who were unlikely to earn them sufficient performance-based pay, or push patients out of the hospital too early if their payments were based on recovery time.
  • Several participants objected to performance-based payment because they felt it was unfair to hold doctors accountable for outcomes that might be out of their control. A woman in New Jersey who was a teacher maintained that a doctor "shouldn’t be judged by my behavior."
  • Many felt doctors were already well-paid – some even said greedy – and were particularly turned off by the idea of awarding bonuses for good outcomes. One woman called such bonuses "incredibly offensive."
  • Participants also believed that payment reform would have to account for the expertise of specialists and the reputation of brand-name hospitals. A man in Alabama specifically cited the Cleveland Clinic, and asked how its "top-of-the-line physicians" could ever accept the same reimbursement as "a doctor who works in rural Alabama."

Why the Public Needs to Be at the Table on Payment Reform

Health care is an issue that affects every one of us in very personal ways. Yet policymakers, including the Obama and Clinton administrations, have failed to engage the public on past reforms to health care policy. As our co-founder, Dan Yankelovich wrote:

They consulted insurance companies, medical professionals and all manner of experts and specialists. But they avoided seeking essential input from the public. It must have seemed unnecessary to them – awkward, time-consuming and a huge bother. So they didn’t do it, and then were surprised at the high levels of public resistance.

The Affordable Care Act may have increased access to health insurance, but we still have many hard decisions and trade-offs to make when it comes to reigning in health care spending.

Our experience suggests that denying the public a seat at the table on these decisions could lead to backlash and policy failure. On the other hand, helping the public understand the health care system, empowering them to deliberate on policy options and making use of their insights and concerns about out-of-pocket spending could help move workable and sustainable health care reform forward.

Interested in what the public has to say about health care policy? In March, we'll be releasing survey findings looking at how the general public responds to resources that could help them find information about health care prices. This research was funded by the Robert Wood Johnson Foundation. If you'd like to receive this report when it is released, sign up for our health care mailing list.


Is the Public Capable of or Interested in Discussing Health Care Costs and Policy?

Submitted by: Edward Gate on Friday, February 13th, 2015

There is likely to be considerable variation in every individual' insurance and financial situations, and it may be difficult to ascertain the actual cost of referrals, consultations, and procedures provided by other professionals. For public, national and local programs may provide financial assistance. Government and private programs are available for low-income public citizens.

Offshore News is also a great website that helps you to keep on track with the latest news.

Great post.

Paying for Quality

Submitted by: Anonymous Submission on Friday, February 13th, 2015

I think there are many Americans who use the health system everyday that want to be invited to the conversation to share their experiences so that we can have a system that works better for patients and medical providers. We need to develop a real team approach that listens to both sides.

We need to be able to call out those people, providers and companies that are abusing the system (double and triple billing insurances and patients, providing poor medical care, drug companies using patients to push/sell their drugs, lack of transparency of mistakes, side effects of drugs, inequity in services, inability to allow dying patients more leeway with medical help available such as experimental medicines, failure to help train/prepare people who use hospice care or want a modified hospice programs that keeps people on their regular medications instead of taking them totally off and supplying them with narcotics when it isn't necessary yet,etc.)

It is not impossible to do but requires all of us to be brutally honest about what is going on and be willing to make some hard decisions that will weed out those who are finding ways to abuse the system.


Should health care be in the hands of for-profit companies?
Are non-profits medical providers becoming like for-profit providers by trying to get as much money from the government?
How can we create a system that supplies what is needed to non-profit medical providers?

How can we create a system that helps cover the cost so that everyone (patients) using the health system gets the services they need?

How can we create a better advocacy system for patients that helps them understand, navigate and challenge the system when needed?

Also, what can we learn from other countries when it comes to having a less complicated medical system with less variations in rates, opportunities for the same quality services for all and with allowing patients to choose their doctors, and medical services?

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