Unintended Consequences

Pay-for-performance payment model – healthcare payment systems that offer financial rewards to providers who achieve, improve or excel their performance on specified quality of care and cost measures (HealthCare Incentives Improvement Institute, N.D.)

Financial incentives play a significant role in how care is provided. The North Ohio Heart Center was found to perform more angioplasties compared to the Cleveland Clinic performing bypass surgeries resulting in different incentive rates (McLaughlin & McLaughlin, 2015). These non-invasive procedures (angioplasties) generated highly profitable incomes for the physicians involved at the North Ohio Heart Center. The physicians perceived these procedures to be a safer option of treatment as opposed to drug treatment or bypass surgery. These decisions impacted patient care by causing more patient visits and more tests being performed generating a cumulative higher reimbursement. These incentives are moving us away from what is best for the patient. Robert Doherty, ACP senior vice president, stated, “we need to move away from the piecemeal approach: how many visits you can generate, how many tests

It is commonly believed that the method of physician remunerations affects their professional behavior. As a result, payment systems are therefore manipulated in attempts to achieve policy objectives with the primary aim to improve quality of care, contain cost and maintain recruitment of human resources in underserved areas. (2,1)

The change to value based purchasing has bought many challenges to the healthcare industry. With the change to value-based purchasing for payments, it has changed how healthcare organization receive payment and delivery care. The advantage of have value based purchasing is that it improves the quality of care while reducing cost in an effort of aligning patient’s with the right provider and treatment plan (Minemyer, Jun 29, 2016). However, there are many disadvantages, such as it increases the patient volume as counteracting the reduction of procedure volume (Brown, B. & Crapo, 2016). Also it makes providers more responsible for care that is beyond the expected treatment of care needed (Minemyer, Jun 29, 2016). With quality measures tied

Some of the projective initiatives are insurance coverage, more patients receiving long term care in medical homes that leads to new benchmarks, high quality of care that leads to greater payment across public and private sectors, narrowing disparities in health and healthcare outcomes, and effective leadership around the globe to increase the highest performance that’s possible (2012).

There is a growing trend in the United States called pay-for-performance. Pay-for-performance is a system that is used where providers are compensated by payers for meeting certain pre-established measures for quality and efficiency (What is Pay-for-Performance, n.a.). We are going to be discussing what pay-for-performance is. There are different aspects of pay-for-performance which include; the effects of reimbursement by this approach, the impact cost reductions has on quality and efficiency of health care, the affects to the providers and patients, and the effects on the future of health care.

The U.S. spends more resources on healthcare than any other nation. Yet, the The Commonwealth Fund (2014, para. 1) claim the U.S. health system consistently ranks last or near last relative to other industrialized nations regarding health outcomes. Consequently, insurance companies are adopting a value-based reimbursement system aimed at containing costs and improving clinical outcomes (U.S. Department of Health and Human Services, n.d., para. 35).

The service-based pay structure provides significant motivation for healthcare providers to deliver as many services as possible, with little to no consideration of patient outcomes. Furthermore, this structure provides no incentive for certain key elements of healthcare such as patient education and care coordination, both of which have led to diminished costs and better outcomes for patients. I am of the opinion that very little quality improvement will take place if this pay-for-service model persists. The current transition from service-based pay to quality-based pay is definitely a move in the right

For anyone who has kept up with the news, the US healthcare system has undergone major changes in recent years. Insurance providers are no longer able to deny someone coverage based on pre-existing conditions. The advent of healthcare marketplaces has changed the way people purchase health insurance. Children can stay on their parents' health insurance plans until 26. Leading the healthcare revolution is InnovaCare Health. This organization is a leading provider of Medicaid and Medicare Advantage plans. InnovaCare Health recently announced it would partner with the Health Care Payment Learning and Action Network. This is a significant private-public partnership that seeks to change compensation models to reflect the quality of care instead of quantity. This new partnership reflects InnovaCare Health's to affect change in compensation sooner rather than later. The current healthcare model focuses on reimbursing physicians based on the number of patients seen or procedures performed. This encourages "treadmill medicine," or a model that focuses on rapid turnover. This can often lead to detrimental effects on patient health. The new quality model would reward physicians based on practice targets. Potential goals include HbA1c goals for patients with diabetes, the percentage of patients who smoke, and hospital stay after surgical procedures.

Besides, the financial incentives for hospitals and physicians that belong to ACOs, Jaffery & Golden 2013, asked and then answered the question “why would providers join this program? One reason is to prepare for the future”. Fee-for-service reimbursement, which has been how hospitals get paid for their services rely solely on the volume of patient seen without taking into consideration the quality of care provided. Payers today, such as government, commercial insurers, employers, and individual consumers are now requesting on value -based-payment, which consist of delivering the highest level of care at a lower cost. The volume based system even though the traditional way of how payments are made is not a viable long-term option (Jaffery and Golden, 2013, p.98).

In recent years, emphasis has been placed on improving the quality of health care services and the overall patient experience. Innovative measures are needed to meet these expectations, while also containing the rising costs of health care. The government has enacted new laws in attempts to provide incentives that base Medicare payments in part on quality. In fact, the Patient Protection and Affordable Care Act of 2010, requires the implementation of value-based purchasing (VBP), which bases Medicare reimbursement rates on the quality of care (Kennedy, Wetzel & Wright, 2013). Hospitals may experience a decrease in revenue initially, however, it is theorized that the increase of transparency and accountability will serve as an incentive for improvements in the overall quality of care provided in the United States.

Health care in the United States in known to be very pricey, with the quality of care not always meeting its expectations. In the year 2011 alone, the money spent towards healthcare was well over two trillion U.S. dollars. One answer to solve this dilemma would be to incorporate a value based care system. A value based care system is structured around the traditional evidence-based practice and medicine model, while emphasizing the quality of care, taking into consideration patient’s wishes and preferences at a reasonable cost in order to improve the quality of life (Harvard Business Review, 2013).

With new reforms being put in place under the Affordable Care Act such as the pay-for-performance (P4P) also known as “value-based purchasing,” which is intended to help provide maintain and efficient programs to improve health care cost. Healthcare providers, hospitals, medical groups, and physicians are offered incentives for meeting certain performance goals; it also fines for increased costs and medical errors such as incorrect medication or dosages. In two different studies quality of care was found to have improved at P4P hospitals compared to non-P4P hospitals Lindenauer et al. (2007) and Grossbart (2006). However, a study by Werner et al.(2011) found no continuing benefits in quality of care. One measure being advocated for is the Hospital Readmissions Reduction Program (HRRP) to prevent hospital readmissions as a way to improve the quality of care and at the same time cut cost. If patients are readmitted within 30 days after discharges due to conditions like acute myocardial infarction (AMI), heart failure, and pneumonia, fines can be levied such as 1 percent of Medicare payments. Others include the Hospital Value-Based Purchasing (VBP) is based on how well the hospital performs compared to other hospitals or the improvement of their own performance compared to a baseline time. The goal is to encourage better outcomes for patients and improve experience during hospital stays. And the Hospital-Acquired Condition (HAC) Reduction Program motivates hospitals to increase the safety of it patients by cut the number of hospital-acquired conditions and patient safety (Medicare.gov, n.d.) (Kruse, Polsky, Stuart, & Werner, 2012)(Gu et al.,

The predominant system of payment to healthcare service providers had been the fee-for-service system for years. This system rewarded the providers for the intensity of their work. However, greater volume of services was not necessarily associated with better service quality. This incentive structure had policy makers concerned and thus, came the pay-for-performance into being established to improve service quality. The use of this system has been expanded by the Patient Protection and Affordable Care Act (PPACA). Many studies were performed to identify ways to make the system more effective. However, the studies had somewhat mixed results.

Department of Health & Human Services. (2011). National Strategy for Quality Improvement in Healthcare. Washington, DC: U.S. Government Printing Office.