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Pay for Performance in Healthcare: Do We Need Less, More, or Different?

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By Bob Wachter, MD

The debate over pay for performance in healthcare gets progressively more interesting, and confusing. And, with Medicare’s recent launch of its value-based purchasing and readmission penalty programs, the debate is no longer theoretical.

Just in the past several months, we’ve seen studies showing that pay for performance works, and others showing that it doesn’t. We’ve heard from some theorists who describe P4P as sapping intrinsic motivation and doing violence to professionalism, and others who feel that its effects are as natural and predictable as water running downhill. Some commentators beg us to stop it, while others denounce P4P’s current incarnations as too wimpy to work and recommend they be turbo-charged.

If we weren’t talking about the central policy question of a field as important as healthcare, we could call this a draw and move on. But the stakes are too high, so it’s worth taking a moment to review what we know.

In the U.S., the main test of P4P has been Medicare’s Hospital Quality Incentive Demonstration (HQID) program. A recent analysis of this program, which offered relatively small performance-based bonuses to a sample of 252 hospitals in the large Premier network, found that, after 6 years, hospitals in the intervention group had no better outcomes than those (3363 hospitals) in the control arm. Prior papers from the HQID demonstrated mild improvements in adherence to some process measures, but – as in a disconcerting number of studies – this did not translate into meaningful improvements in hard outcomes such as mortality.

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Is It Time To Charge Medicaid Members for ER Usage?

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By Al Lewis

No one would deny that we’ve reached a point in public healthcare finance where tough choices have to be made about what gets covered and what doesn’t. There is, however, one fairly easy choice, and that is to reconfigure the $3 copay for Medicaid members using the emergency room.

I would propose a replacement benefit of $0 for the first visit and $20 for each subsequent one, in a given calendar year. Not every state, but any state that reaches certain thresholds for physician access or urgent care availability may switch to this policy.

Here are the arguments in favor. First, each $3 visit costs the state and federal government about $500.  There are few discretionary or semi-discretionary patient decisions that cost so little to trigger so much taxpayer spending.  (Hospitalizations have that kind of ratio, but a patient can’t check himself into a hospital the way he can visit an ER.)

Second, one must consider the historical context. The $3 copay (“$3” is a shorthand for $0 to $10 — I don’t think it is over $10 anywhere) is a vestige of the bad old days when it was very difficult to find physicians who accepted Medicaid patients. That is still the case in some locales; they would not be eligible for this waiver. The world has changed, but the copay hasn’t.

Third, ER utilization rates in the TANF population, which because of its average age is generally pretty healthy, far exceed that of the commercially insured population. This is despite the fact that TANF members in general cost much less than commercially insured people, a gap that widens still further once birth events are removed from the calculation. Clearly there is much excess utilization.

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Engage with Grace this Thanksgiving

By Alexandra Drane

Once again we’re hosting the annual Engage with Grace blogrally. Engage with Grace aims to get people talking about their wishes for end of life and advanced care. If you want to host this on your blog please do and feel free to get the html for this post here — Matthew Holt

One of our favorite things we ever heard Steve Jobs say is … “If you live each day as if it was your last, someday you’ll most certainly be right.” We love it for three reasons: 1) It reminds all of us that living with intention is one of the most important things we can do. 2) It reminds all of us that one day will be our last. 3) It’s a great example of how Steve Jobs just made most things (even things about death – even things he was quoting) sound better.

Most of us do pretty well with the living with intention part – but the dying thing? Not so much. And maybe that doesn’t bother us so much as individuals because heck, we’re not going to die anyway!! That’s one of those things that happens to other people …

Then one day it does – happen to someone else. But it’s someone that we love. And everything about our perspective on end of life changes.

If you haven’t personally had the experience of seeing or helping a loved one navigate the incredible complexities of terminal illness, then just ask someone who has. Chances are nearly 3 out of 4 of those stories will be bad ones – involving actions and decisions that were at odds with that person’s values. And the worst part about it? Most of this mess is unintentional – no one is deliberately trying to make anyone else suffer – it’s just that few of us are taking the time to figure out our own preferences for what we’d like when our time is near, making sure those preferences are known, and appointing someone to advocate on our behalf.

Goodness, you might be wondering, just what are we getting at and why are we keeping you from stretching out on the couch preparing your belly for onslaught?

Thanksgiving is a time for gathering, for communing, and for thinking hard together with friends and family about the things that matter. Here’s the crazy thing – in the wake of one of the most intense political seasons in recent history, one of the safest topics to debate around the table this year might just be that one last taboo: end of life planning. And you know what? It’s also one of the most important.

Here’s one debate nobody wants to have – deciding on behalf of a loved one how to handle tough decisions at the end of their life. And there is no greater gift you can give your loved ones than saving them from that agony. So let’s take that off the table right now, this weekend. Know what you want at the end of your life; know the preferences of your loved ones. Print out this one slide with just these five questions on it.

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Study Says, Something Other Than What We Were Expecting. EHR Portals Increase Hospitalization Rates

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By Jaan Sidorov, MD

Hey there Accountable Care Organization executive.

You’re probably willing to continue to commit millions of dollars toward an electronic health record (EHR) coupled to an online patient portal.  That’s because you’ve been told by your leadership team that electronic consumer empowerment, patient-provider communication and the substitution of efficient two-way messaging for costly face-to-face visits will increase quality, reduce expenses, generate shared savings and guarantee that your life-sized portrait will be prominently displayed in your flagship hospital’s lobby.

Well, after you’ve read a just-published JAMA research study by Ted Palen, Colleen Ross, David Powers and Stanley Xu, you may want to tell your administrative assistant to cancel that appointment with the portrait artist.

The article’s title is Association of Online Patient Access to Clinicians and Medical Records With Use of Clinical Services.

How the study was done:

Kaiser Permanente Colorado added “MyHealthManager” (MHM) to their EHR in May 2006. MHM allows patients to view tests, records, problem lists as well as care plans, schedule appointments, request refills and message their doctors. By June of 2009, over 375,000 Kaiser patients had signed up for MHM. Of those, about 45% had used the system at least once.  Of this number, Kaiser researchers pulled the records of 44,321 persons who had been continuously enrolled in the Kaiser system for at least two years.

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Cigarettes Should Cost $25 a Pack

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By Vijay Govindarajan and Srikanth Srinivas

Henry David Thoreau said, “There are a thousand hacking at the branches of evil to one who is striking at the root.”

We have hacked at healthcare costs for what seems like thousands of times, with very limited success. It is time to strike at the root. Rather than focus on reducing costs after preventable diseases have taken hold, it is time to focus attention on eliminating the disease.

Let us look at two specific examples.

1. The CDC (Center for Disease Control and Prevention) has estimated that the cost of smoking(estimated cost of smoking-related medical expenses and loss of productivity) exceeds $167 billion annually. The CDC has also estimated that 326 billion cigarettes (combustible tobacco, to be more precise) went up in smoke in 2011. In other words, every cigarette consumed costs the nation about 50 cents; every pack, $10.

Put another way, while the smoker paid approximately $5 a pack up front, there was also an additional $10 secret surcharge — the cost of which is born by all of us (such as taxpayers, anyone who buys health insurance, even private companies who suffer from lower productivity as a result). It is as if we are telling the smoker, “I know you can’t afford to pay $15 for a pack. So we will give you $10 so you can afford to smoke.” We are not this generous even with people who don’t have one square meal a day. We spent $78 billion on food stamps, with constant pressure to bring that down further even if some people will be left without food as a result.

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‘Reducing Cancer Among Women of Color’ App Challenge

By J. Nadine Gracia, MD

Photograph Dr. J. Nadine Gracia is the Deputy Assistant Secretary for Minority Health (Acting) Calling all software developers, entrepreneurs, and innovators – the Department of Health and Human Services (HHS) seeks your help in empowering women in minority and underserved communities to fight and prevent cancer.

Each year, more than 300,000 new cases of breast, cervical, uterine, and ovarian cancer are diagnosed in the United States. While these diseases touch every community, disparities in education, prevention, early treatment, quality of care, and access to support mean that minority and underserved women bear a disproportionate burden.

In the face of these disparities, HHS has launched a new challenge to help turn the tide: the “Reducing Cancer among Women of Color” App Challenge. The challenge invites developers to create an application (app) for mobile devices that can help improve the prevention and treatment of breast, cervical, uterine, and ovarian cancer. Up to $100,000 will be awarded for apps that provide high-quality health information to women and community health workers, interface securely with patient health records, and strengthen communication across provider care teams.

This month, as we reaffirm our commitment to promoting prevention and fighting cancer in recognition of National Breast Cancer Awareness Month, we are turning to new platforms and new approaches in our effort to address cancer disparities. We are reaching consumers where they are – recognizing that minorities rely heavily on mobile devices for accessing information. We are turning to new technology, and sourcing solutions directly from those who understand it best. And we are raising awareness about health equity among new audiences – including those who are already dedicated to thinking innovatively about solutions for tough challenges.

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Skilled Nursing Providers Playing an Increasing Role in Reducing Hospital Re-admissions

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By Jonathan Hill

The $200 billion skilled nursing and rehabilitation market is in the midst of a transformation and in a new world of ACOs and readmission penalties, we see these providers playing a significant role in helping hospitals reduce readmissions and providing patients with coordinated and professional care in a sub-acute environment.

In March 2012, the Medicare-Medicaid Coordination Office and the Center for Medicare and Medicaid Innovation announced the Initiative to Reduce Avoidable Hospitalization among Nursing Facility Residents. Through this initiative, CMS is partnering with seven organizations to implement strategies to reduce avoidable hospitalization for dual eligibles who are typically long-stay residents at nursing facilities. Each participant in the initiative is required to partner with a minimum of 15 dual eligible certified nursing facilities in the same state where the intervention will be implemented.

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Denying Reality About Bad Prognoses

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By Bob Wachter, MD

The human capacity to deny reality is one of our defining characteristics. Evolutionarily, it has often served us well, inspiring us to press onward against long odds. Without denial, the American settlers might have aborted their westward trek somewhere around Pittsburgh; Steve Jobs might thrown up his hands after the demise of the Lisa; and Martin Luther King’s famous speech might have been entitled, “I Have a Strategic Plan and a Draft Budget.”

Yet when danger or failure is just around the corner, denial can be dysfunctional (see Karl Rove on Fox News), even suicidal (see climate change and Superstorm Sandy).

Healthcare is no exception. Emerging evidence suggests that patients and their surrogates frequently engage in massive denial when it comes to prognosis near the end of life. While understandable – denial is often the way that people remove the “less” from “hopeless” – it can lead to terrible decisions, with bad consequences for both the individual patient and society.

First, there is evidence that individuals charged with making decisions for their loved ones (“surrogate decision-makers”) simply don’t believe that physicians can prognosticate accurately. In a 2009 study, UCSF’s Lucas Zier found that nearly two-thirds of surrogates gave little credence to their physicians’ predictions of futility. Driven by this skepticism, one-in-three would elect continued life-sustaining treatments even after the doctor offered their loved one a less than 1% chance of survival.

In a more recent study by Zier and colleagues, 80 surrogates of critically ill patients were given hypothetical prognostic statements regarding their loved ones. The statements ranged from “he will definitely survive” to “he will definitely not survive,” with 14 statements in between (including some that offered percentages, such as “he has a [10%, or a 50%, or a 90%] chance of survival”). After hearing these statements, surrogates were asked to interpret them and offer their own survival estimates.

When the prognosis was optimistic (“definitely survive” or “90%” survival odds), surrogates’ estimates were in sync with those of the physicians. But when the prognosis was pessimistic (“definitely not survive” or “he has a 5% chance of surviving”), surrogates’ interpretations took a sharp turn toward optimism. For example, surrogates believed that when the doctor offered a 5% survival chance, the patient’s true chance of living was at least three times that; some thought it was as high as 40%. Remarkably, when asked later to explain this discordance, many surrogates struggled. Said one, “I’m not coming up with good words to explain this [trend] because I was not aware I was doing this.” The authors identified two main themes to explain their findings: surrogates’ need to be optimistic in the face of serious illness (either as a coping mechanism for themselves or to buck up their loved one), and surrogates’ beliefs that their loved one possessed attributes unknown to the physician, attributes that would result in better-than-predicted survival (the “he’s a fighter” argument).

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Tough Hard Decision: What To Do About Medicare

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By ROB LAMBERTS, MD

It seems both ironic and inevitable: I won’t be getting any more “meaningful use” checks. It’s not that I didn’t qualify for the money; I saw plenty of patients on Medicare and met all of the requirements. I was paid for my first year money without much hassle. The problem I am facing is this: I am probably going to be “opting out” of Medicare, and once I do that I will cease to exist as far as HHS is concerned, and they are the ones who write the “meaningful use” checks. No existence equals no money.

This is ironic because I have gotten famous for how well I’ve used electronic medical records, have written advice for physicians trying to qualify for “meaningful use,” and am esteemed enough to be often asked for my opinion on the subject (culminating in a presentation last year for CDC public health Grand Rounds).  I have spent much of the past 16 years disproving the myths that small practices couldn’t afford EMR, that EMR decreases profitability, or that they reduce quality of care.  We not only could afford EMR, we flourished, using it as a tool to increase both productivity and profitability.  Not to overstate the issue, but my practice (and others like it) paved the way for the existence of “meaningful use.”  I don’t know if that’s a good or a bad thing.

But, as fate would have it, I am leaving the practice in which I did all of this work and am starting a new practice with a different payment system.  Instead of charging for office visits or tests done in my office, I am charging a monthly “subscription” fee for access to my care and to the other resources I offer.  But there isn’t a Medicare code for a monthly subscription fee, and the rules of Medicare are such that, as far as I can tell, I cannot have the practice I intend to build and be listed as a Medicare provider.  This is the case even if I never charge Medicare for any of my services.

Regarding my status as a Medicare provider, there are three options:

  1. Accept Medicare as a “participating” provider – This means that I see Medicare patients and accept what they say I will be paid.  I bill CMS for my services, which are based on my “procedure codes.”  My main procedure is the office visit, but I can also bill for things like immunizations, lab tests, and office procedures.  The more procedures I bill for, the more I get paid, but I must justify this billing in my documentation or run the risk of being accused of fraud.
  2. Become a “non-Participating” Medicare provider – In this scenario, I am paid by the patient for the encounter and then they are reimbursed for what they paid me.  The choice of what I bill happens the same way, and I still must set fees based on what CMS tells me (although I can bill a little bit more than I would if I was a participating provider).  Billing is, once again, based on the documentation of the visit.
  3. “Opt out” of Medicare altogether – Opting out means that I am no longer in the Medicare database as a provider and won’t get paid by them at all.  Patients are free to come to me, but they must pay what I charge, and I set my fees based on what I think is best.Continue reading…