Performance-based pay in health care?

Performance-based pay in health care?

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Given some off-this-stage politicking I’ve been involved in, the Medicare drug coverage argument, and the recent "Physicians" plan in JAMA proposing single-payer, this Forbes article caught my attention. I subscribed to Forbes for a while and they never ceased to amaze me with how captured they were by new Internet business models while they decried any attempt to reform old-world fee-for-service medicine. Now even Forbes is coming out in limited favor of some type of pay for performance linked to basic quality guidelines. Back in 1997 my IFTF colleagues (especially Greg Schmidt) and I forecast that insurers paying some type of reward for performance would account for a sizable minority of the health care system by 2010.  In the RWJ-sponsored "Health & Health Care in America: A Ten year Forecast" we wrote:

"…a separate type of payment system will develop. Plans and intermediaries will devise reimbursement programmes that give providers incentives to deliver care in a manner that improves quality, customer satisfaction, patient tenure in the plan, and outcomes, as well as productivity and cost-effectiveness. We dub this system ‘performance-based reimbursement’, as payments will depend on the providers’ performance on a strung of relevant algorithms. By the latter part of the next decade this system will be the single most important way of paying provider organizations, although the old methods will still be a part of the system."

Well on re-reading this section I note that the accompanying chart had Performance-based pay at only 15% of all dollars by 2010, with the rest evenly split between prospective payment (DRGs and capitation) and FFS land.  So when you’re busting to get out a big report not every word will be internally consistent.  And this change (should it happen) would certainly seem revolutionary compared to what has happened in the first five years of our 13 year forecast. At the time the report was written there were already HMOs paying some limited amount to medical groups based on quality metrics.  Since then the quality movement seems to have somewhat been the baby thrown out with the bathwater of the managed care backlash.  But I think that as the initial foregin policy concerns of the first Bush administration fade, and even if it doesn’t pass Drug Coverage this year, Congress will return to the future of Medicare as a whole.  And if the political right (as represented by Forbes) is starting to think about the possiblity of performance based-pay, then the mainstream private health payers will start to introduce it too. When that happens, we’ll be on for another round of changes in care delivery and provider organization.

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