http://online.wsj.com/news/articles/SB10000872396390443890304578010264156073132
ID: 1099759 • Letter: H
Question
http://online.wsj.com/news/articles/SB10000872396390443890304578010264156073132
Explain the pay-for-performance features for hospitals build into the new healthcare law (Patient Protection and Affordable Care Act) that were mentioned in the article.
Explain whether, in your view, the provisions of the law will accomplish their objectives of increasing the quality/efficiency of healthcare services delivered in hospitals while at the same time limiting (Medicare) medical expenditures.
Explain in your view the likely consequences of this legislation on the hospital services industry.
Explanation / Answer
Pay for performance systems link compensation to measures of work quality or goals. As of 2005, 75% of all U.S. companies connect at least part of an employee's pay to measures of performance, and in healthcare, over 100 private and federal pilot programs are underway. Current methods of healthcare payment may actually reward less-safe care, since some insurance companies will not pay for new practices to reduce errors, while physicians and hospitals can bill for additional services that are needed when patients are injured by mistakes. However, early studies showed little gain in quality for the money spent,[3] as well as evidence suggesting unintended consequences, like the avoidance of high-risk patients, when payment was linked to outcome improvements.
The 2006 Institute of Medicine report Preventing Medication Errors recommended "incentives...so that profitability of hospitals, clinics, pharmacies, insurance companies, and manufacturers (are) aligned with patient safety goals;...(to) strengthen the business case for quality and safety." A second Institute of Medicine report Rewarding Provider Performance: Aligning Incentives in Medicare (September 2006) stated "The existing systems do not reflect the relative value of health care services in important aspects of quality, such as clinical quality, patient-centeredness, and efficiency...nor recognize or reward care coordination...(in) prevention and the treatment of chronic conditions." The report recommends pay for performance programs as an "immediate opportunity" to align incentives for performance improvement However, significant limitations exist in current clinical information systems in use by hospitals and health care providers, which are often not designed to collect data valid for quality assessment
In the United States, most professional medical societies have been nominally supportive of incentive programs to increase the quality of health care. However, these organizations also express concern over the choice and validity of measurements of improvement. The American Medical Association (AMA) has published principles for pay-for performance programs, with emphasis on voluntary participation, data accuracy, positive incentives and fostering the doctor-patient relationship, and detailed guidelines for designing and implementing these programs. Positions by other physician organizations reflect skepticism on the validity of performance measures, and promote accommodation for an individual physician's clinical judgement, protection for a patient's preferences, autonomy and privacy, and reversing the trend of health care cost reductions to accommodate the increased administrative costs required by participation in such programs.
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