Rewarding quality through Medicare reform

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In my last post, I was discouraged by the lack of incentives for innovation in the public health system.  I bemoaned in particular the payment systems that reward bad care in equal measure to good care, a surefire recipe (to my mind) for a stagnant system. Lo and behold, the Obama administration is leading the quality and innovation bandwagon, with the first in a series of initiatives to reward (and punish) Medicare and Medicaid providers who meet quality benchmarks (or fail to).  At the end of last month, the administration issued a final regulation which initiates the hospital quality payment system – an initiative which punishes poor performing hospitals by withholding as much as 1% of payments.  (A pittance at first glance, but not so when you consider that Medicare and Medicaid payments in 2010 were projected at $793 billion .) The Los Angeles times reports that the “Obama administration sees improving quality as the best strategy for saving cash-strapped public healthcare programs like Medicare and Medicaid rather than requiring beneficiaries to pay more for their care, as House Republicans proposed in the budget they passed this month.” How exactly does that work, sceptics are probably asking?  The argument goes that currently, many patients are returning to hospitals and service providers because the initial care they receive is simply bad, or worse, dangerous.  (A study published last month in Health Affairs estimated that 33% of patients experience “adverse events” during a hospital stay – the figure is 25% for Medicare patients.)  These patients are often re-hospitalized or require even more substantive (read: expensive) care following the initial treatment.  Encouraging quality care, the argument continues, will decrease overall expenditure by ensuring that initial hospital visits do the job the first time around. Rewind a second and make sure to understand the myriad implications of poor care.  Not only do taxpayers pay for more services when quality is compromised, but providers are paid more when they do a shoddy job.  Imagine a product or service for which you have to return and buy more if the first purchase doesn’t work out.  Unlike most industries, consumers get very little chance to vote with their feet – they choose their care through what’s available for their situation, in many cases, a decision with very few options.  Nor do hospitals currently have to report their quality metrics – under previous legislation, this was optional.  The recent reform changes this dynamic for the better

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Rewarding quality through Medicare reform

Posted by Foreign Affairs Global Health on May 11 2011. Filed under Aid & Development, Policy & Systems. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry