UNITING PHYSICIANS & PATIENTS AS A VOICE IN HEALTH CARE
Advocates of managed care have asserted that quality of care can be measured so precisely that patients would soon be able to compare the quality of plans, hospitals, clinics, and even individual physicians. Although this prophecy has been made now for more than three decades, it has yet to come true. It is as impossible today for the average patient to "shop" for a doctor or hospital or insurance policy based on quality as it was in 1970 when HMO advocate Paul Ellwood first proposed "performance reports" for HMOs. (1)
Despite the failure of accurate report cards to materialize, insurance companies and managed care advocates have lately begun to promote a method of paying doctors known as "pay for performance," a method which, like capitation, assumes the existence of accurate report cards. Last year, the Centers for Medicare and Medicaid Services announced, per instructions from Congress, it would conduct a three-year pay-for-performance demonstration project, starting in 2003 (2). Also in 2002, the Integrated Healthcare Association, a coalition of seven California plans, announced a pay-for-performance project that will issue its first report cards on physicians in 2004 (3). In Minnesota, HealthPartners, Blue Cross and Blue Shield, and Medica have all announced pay-for-performance programs. (4)
The phrase "pay for performance" is usually used in a context which indicates it means "more pay for higher quality of care." However, the phrase is sometimes used in a manner which indicates it means "more pay for lower utilization rates" in addition to "more pay for higher quality." This conflation of phrases with two different meanings is not unusual for the HMO industry. HMO officials and managed care advocates have in the past frequently treated the phrases "quality assurance" and "utilization review" as synonymous when, of course, they are not. MPPA opposes, unconditionally, "pay for performance" if it means "pay for reduced utilization." In this paper, "pay for performance" is defined to be synonymous with "pay for improved quality of care."
Because pay-for-performance (PFP) schemes are spreading, MPPA anticipates that the Citizens Forum will be asked to recommend PFP to the governor, either as a means to improve quality or to reduce cost. We make three points in this letter:
(1) The Citizens Forum was established to recommend methods of containing health care costs, not improving quality. Because there is no solid evidence that PFP can contain cost, the Forum should leave PFP off its agenda.
(2) If the Forum is going to expand its scope to include an examination of methods of improving quality, the Forum should focus first on solutions that are far more likely to improve quality than PFP, including eliminating managed care, the nursing shortage, and lack of insurance.
(3) PFP is unlikely to improve quality for the vast majority of medical services; in the few cases in which it will work the expense of "grading" physician performance accurately will be substantial and may well offset, or more than offset, any savings derived from improved quality; PFP has the potential to damage quality.