Tag: "pay for performance"

ACO Math

Merit-PayyLinda Gorman explained the problem of pay-for-performance with teachers: because of the small number of students per teacher, average student test scores can be more influenced by outside-the class-room size than by what the teachers are doing. As a result, a P4P scheme can end up rewarding bad teachers and penalizing good ones.

Austin Frakt has identified an additional problem in rewarding Accountable Care Organizations for their performance. In order to get around the small sample size problem, ACOs have to have at least 5,000 patients. But the larger the number of patients, the more physicians that are needed. And if gains are shared equally (rather than apportioned on the basis of marginal product) the larger the number of doctors, the less incentive anyone of them has to meet group goals.

Headlines I Wish I Hadn’t Seen

Two online health calculators designed by federal officials to help states and employers comply with ObamaCare mandates are riddled with so many flaws that users are abandoning them.

Another pay-for-performance failure.(HT: Jason Shafrin)

The government also knows what you buy.

Ramthun on HSAs for the Military, and Other Links

Roy Ramthun asks: why can’t the military and their families have Health Savings Accounts?

P4P in Australia: Physician behavior didn’t change.

Can you cure yourself by just thinking?

Britain doesn’t prove the Keynesians are right; it proves they are wrong.

Pay for Delay

The big pharmaceutical with a blockbuster drug gets to have the only product on the market for a little longer. It also doesn’t have to deal with price competition. The FDA estimates generics usually cost 80 to 85 percent less than brand-name drugs — not great news for the maker of the brand-name medication.

As for the generic drug maker, it has to hold off on coming into a given market — but it also gets a settlement from a pharmaceutical, often in the millions. Not a shabby deal either.

The Federal Trade Commission, which brought the suit, has a completely different take. It argues that this is horrible for consumers, who end up with higher drug prices as generics stay off the market longer than they otherwise would. With more than a dozen pay-for-delay deals struck annually, the FTC estimates that these settlements will cost consumers $35 billion.

More from Sarah Kliff.

Surprise: P4P Doesn’t Work for Nursing Home Care

Quality improvement under P4P was inconsistent. While three clinical quality measures (the percent of residents being physically restrained, in moderate to severe pain, and developed pressure sores) improved with the implementation of P4P in states with P4P compared with states without P4P, other targeted quality measures either did not change or worsened. Of the two structural measures of quality that were tied to payment (total number of deficiencies and nurse staffing) deficiency rates worsened slightly under P4P while staffing levels did not change.

Study. Jason Shafrin comments.

Hospitals May Gain From Their Mistakes

[I]n a competitive environment increasingly characterized by transparency of outcomes, the surgical complication rate is an important measure of hospital performance that could strongly influence choices of care and care sites made by patients and payers. However, programs to achieve such improvements can reduce hospital revenues, as reimbursements to treat patients for complications decrease…We found that if a hospital’s surgical inpatient volume is not growing, such a program results in negative cash flow.

Source: Health Affairs.

Why the Doctor Shortage Will Be Worse Than You Think

Physicians are altering their work habits in a variety of ways to work less with more becoming hospital employees or cutting back on hours their practices are open and limiting the number of patients they will see. Doctors are working 6 percent fewer hours than four years ago and treating nearly 17 percent fewer patients, according to a new survey out this month from doctor staffing company Merritt Hawkins for The Physicians Foundation.

More on physicians’ reduced working hours in Forbes.

Doctors Do Better When Big Brother Is Watching

Doug Rex of Indiana University — one of the most respected gastroenterologists in the world — decided to use video recording to check the thoroughness of colonoscopies being performed by doctors in his practice.

After assessing 100 procedures, he announced to his partners that he would be timing and scoring the videos of their future procedures (even though he had already been doing this). Overnight, things changed radically. The average length of the procedures increased by 50%, and the quality scores by 30%. The doctors performed better when they knew someone was checking their work.

More on the use of videotapes to measure quality of care in the WSJ.

Medicare’s P4P Program Likely to Accomplish Little

Medicare’s new hospital pay-for-performance program for all acute care hospitals will begin in October 2012. It will be the largest Medicare quality improvement initiative for hospitals to date. Using 2009 data on hospital performance, we calculated hospital performance scores and projected payments under the new program for all eligible hospitals. Despite differences across hospitals in terms of performance, expected changes in payments were small, even for hospitals with the best and worst performance scores. Almost two-thirds of hospitals would experience changes of just a fraction of 1 percent. Although the program will in effect redistribute resources among hospitals, our data suggest that the redistribution is not likely to cause major problems because the amount being redistributed is also small.

Health Affairs study.

Providers Are Smarter Than Insurance Companies

But you already knew that didn’t you? I usually disagree with Steffie Woodhandler and David Himmelstein but (like a stopped clock) they are occasionally correct. This is their view on why pay-for-performance doesn’t work:

Intensive coding — that is, embellishing diagnoses to maximize payment under per case or risk adjusted capitation schemes — also makes patients seem sicker on paper, and hence boosts risk adjusted quality scores. Under US Medicare’s DRG (diagnosis related groups) hospital payment system, recoding a diagnosis as “aspiration pneumonia with acute or chronic systolic heart failure” rather than simply “pneumonia with chronic heart failure” triples the payment and increases the risk score. Such “upcoding” is endemic among private health maintenance organizations that contract with Medicare for risk adjusted capitation payments, as well as among hospitals.

HT: Sarah Kliff.