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Sunday, September 18, 2011

Fourth in the Series

The following is the fourth suggestion on health care reform included in the Commonwealth Fund report to the National Governors Association, as reported by former Vermont governor James Douglas in the May 23 issue of Modern Healthcare:

“Payment systems reforms: We need to pay for health care based on quality, not quantity. Most payment structures compensate providers for each test, procedure or visit. We should instead pay based on performance and perhaps combine payments to groups of providers to ensure the kinds of coordination needed.”

The health field has long been plagued by concepts that look good in writing and sound good in speeches, but which nobody knows how to implement.

This fourth suggestion is a case in point. Nobody could be against the idea of paying for quality rather than quantity, but the devil is in the details, as they say, and the question is how one might go about doing it.

For one thing, quality can only be measured in retrospect. So any payment based on quality is based on what quality was in some previous period, like last year. So there is always the risk that a provider’s performance will deteriorate, in which case a regular payment was being paid last year when quality was good, but a premium payment is being made this year when it is not so good.

It would also be the case under this approach that paying more for quality would be inflationary in a system in which costs are already too high.

All of which overlooks the possibility that the high quality performers probably have lower costs, as well, and could prosper with payment that is lower than what would be needed by providers offering lower quality.

One way to honor quality is to allow the insurance company to send its subscribers to providers who, in the company’s opinion, offer the most attractive combination of cost and quality. But that would mean a competitive market economy in health care and compromising the patient’s freedom of choice, neither of which we are yet ready to consider.

One last comment. Paying providers by groups makes coordination easier. It does not “ensure” it.

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