Wednesday, December 13, 2006

He Who Pays the Piper Calls the Tune

Robert Pear reported in The New York Times this week that Medicare will begin paying doctors a small bonus for reporting "how often they provide quality care, as defined by the government." Put aside your desires for a small government for a moment. If the government is going to pay for health care, it has the responsibility to ensure that its payments are resulting in quality care. Paying specifically for quality is one way of trying to do this.

Here's a description of what will happen and a little bit of the reason why:

Now, doctors can qualify for a 1.5 percent bonus in the second half of 2007 if they report data on the quality of their care, using measures specified by the government. For example, doctors could be asked to report how often they prescribe a particular drug after a heart attack or how well they control blood pressure in patients with diabetes.

With these statistics, Medicare officials say, they will , in the near future, be able to reward doctors who follow clinical guidelines and perhaps penalize those who flout such standards without justification.

For several years, Medicare officials have advocated a pay-for-performance system, noting wide regional variations in the practices of hospitals and medical specialists.

Here are some reactions quoted in the article. First up, Senator Grassley, a proponent of the bill:
“Medicare now pays the same amount regardless of quality,” Mr. Grassley said. Indeed, he said, Medicare “rewards poor quality,” paying doctors to treat complications caused by their own mistakes.

That's not the only thing it rewards, but it does pay for procedures rather than outcomes. Next, an unsurprising comment from the medical profession:
“This is a very significant step,” Catherine G. Cohen, vice president of the American Academy of Ophthalmology, said Monday. “It’s the first time Medicare has ever paid individual doctors a differential for reporting quality measures. It could impose a significant new burden on doctors’ offices.”

It's hard to imagine doctors don't already keep track of the frequency and conditions under which they apply different treatments. If they don't, that's telling us something. If they do, then it would not be a "significant new burden." And since it is voluntary, it is hardly "imposed."

I'll conclude with my personal favorite:
Representative Pete Stark of California, who will become chairman of the Ways and Means Subcommittee on Health in January, said, “The entire concept of pay-for-performance is offensive.” Doctors, Mr. Stark said, are supposed to provide “quality care” and should not be paid extra for doing so.

Shall we rephrase that as, "Doctors are supposed to provide 'quality care' and should not be paid less for failing to do so?" What's the alternative, holding your breath until they agree to provide quality care?

Gathering information on the type of care being provided is the appropriate first step to ensuring that the money being taxed from workers to pay for the care of elderly is being spent in an efficient manner. If you think that the government is incapable of doing this, then you might consider joining the group of people who think the government should get out of the business of paying for so much of the nation's health care. It doesn't have to be perfect measurement--it just has to result in better outcomes on average.


Darren Lubotsky said...


I think this is a good step and I look forward to reading evaluations of it several years down the road.

Having said that, I do have some concerns:

1. Incentivizing doctors to follow proceedures that are generally accepted as appropriate is fine. But my guess is that there are many more conditions where the appropriate course of action depends on patient-specific factors that a Medicare formula could never take into account. If the pay-for-performance plan is extended into these types of proceedures, I worry that doctors will too often follow the Medicare guidelines but not give patients appropriate care.

2. It is easy to imagine conditions and situations where incentivizing doctors will lead doctors to cream-skim the healthiest patients, rather than taking on less-healthy patients and risk not meeting performance goals/standards. I realize the new system of paying for inputs rather than outputs is meant to avoid this problem, but it certainly doesn't make the issue go away.

Darren Lubotsky
University of Illinois

son2 said...

I wonder how much of an impact this will really have on the medical profession.

Hopefully, one effect will be to kickstart electronic recordkeeping (of the "frequency and conditions under which [doctors] apply different treatments"). Detailed recordkeeping is probably an onerous burden for physicians who still keep patient files on paper.

But having reliable computer databases of patients' conditions, treatments, and outcomes is more than halfway towards being able to draw a serious conclusion about what treatments are most effective.