Demanding Quality: BUMC Faculty Helping to Create New Medicare Payment Paradigm
In the complicated, multi-billion dollar business of Medicare reimbursement, one important consideration — quality — has been neglected when determining what doctors and hospitals get paid for the services they deliver.
For nearly 40 years, the federal government has been a passive payer of the medical bills for the nation’s largest health plan, anteing up for the knee replacement, throat culture, or emergency room diabetic seizure treatment without much administrative concern about whether or not the treatments actually improve the health of the patients who get them.
But all that is soon to change. Embedded in the Obama Administration’s current plans to reform and rebuild the nation’s health care system is an effort to improve the quality of health care delivered by linking quality measures to Medicare reimbursement.
Three Boston University faculty members are at the heart of the effort. BU School of Public Health (BUSPH) Professor Gary Young and Associate Professor James Burgess, both in the Department of Health Policy and Management, are working with Arlene Ash, a research professor of internal medicine at the Boston University School of Medicine, to help design incentive systems for hospitals and physicians that will reward quality of care. The trio are working to deliver new value-based purchasing systems for hospitals and physicians that will transform medical reimbursement standards used by the Centers for Medicare and Medicaid Services (CMS), the agency which oversees more than $170 billion in Medicare reimbursements.
“We are helping to design what will be the next big paradigm for provider reimbursement in the healthcare industry,” said Young, who is also chair of the BUSPH Department of Health Policy & Management and associate director of the BU-affiliated Center for Organization, Leadership and Management Research at the U.S. Department of Veterans Affairs. “We are working to develop the financial incentive system to reward quality.”
“Traditionally physicians have billed for services and were reimbursed based on a fee schedule for those services,” explained Young. “Under Medicare, hospital patients have been assigned to a category based on a classification system called diagnostic related groups and there has been a fixed price payment associated with that. But nowhere in the whole structure has quality come into play,” he said. “Under a new value-based purchasing system, payment will be adjusted to take quality into account for the service that is provided.”
The overall push to link quality of care to medical reimbursement began about a decade ago, said Young, with the publication of a report by the Institute of Medicine called “To Err is Human.” The report estimated that 50,000 to 100,000 people die every year due to medical errors, and this resulted in a call to action for stakeholder groups to adopt measures that would improve patient care.
“It became quickly obvious that one of the reasons people don’t get better care is because providers are not given incentives to deliver quality care or preventative care,” said Young, who has spent the last seven years of his career immersed in studying the effectiveness of so-called pay-for-performance systems.
Two years ago, Young and Burgess were asked by CMS to prepare a report to the U.S. Congress about how hospital value-based purchasing could achieve the government’s goal for ensuring the delivery of efficient and quality health care. They worked on that effort with colleagues at Brandeis University and at the management consulting firm Booz Allen Hamilton, but the report was tabled before it was delivered to Congress in favor of developing a more comprehensive plan that would fit in with the new Administration’s health care reform agenda.
At present, Young, Burgess and Ash are working with colleagues at Brandeis University and the consulting firm Mathematica Policy Research to complete designs for value-based purchasing within the Medicare program that will cover both hospitals and physicians. As a first major step, they are working to specify the criteria for selecting quality measures for the initiative and then developing methods for combining those measures into a single quality performance index that can be used to adjust provider payments. Other steps involve developing the structure of the financial incentives, which includes dealing with issues such as whether and how to reward providers for improving their quality of care even if they fall short of the intended targets for particular measures. Additionally, the incentive system is also intended to promote efficiency in care as well as quality.
“One of the many challenges in developing separate but interrelated programs for both hospitals and physicians,” says Burgess, ” is the need to balance the intensity of the incentives, or how precisely to reward behavior, against the practical limitations on the means of measuring performance.”
If the new incentives work as they are designed, say Young and Burgess, healthcare providers will spend more time on preventative care and effective management of chronic conditions, which should help reduce costs to the system while improving the overall health of patients.
Young, Burgess and Ash will be working on the design of the plan for at least the next 12 months as the Obama Administration makes its bid to get a major health reform bill passed though Congress. While the fate of such a bill is uncertain at this time, both Young and Burgess are confident that value-based purchasing is a concept that is here to stay.
Submitted by Sharon Britton sbritton@bu.edu