Pay-For-Performance Report

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POINT 1: THE FORUM’S FOCUS IS COST CONTAINMENT

The mission of the Minnesota Citizens Forum on Health Care Costs is to find ways to reduce costs, not improve quality. This mission is obvious from the Forum’s name, and from the governor’s press release announcing the creation of the Forum (6). We do not mean to suggest that the Forum should ignore the effect that poor quality has on cost, nor that the Forum should ignore the impact its cost-containment recommendations could have on quality. We are saying that the Forum should recommend PFP, and any other quality-improvement proposal, as a cost-containment measure only if proponents of the proposal produce some empirical evidence that it can reduce costs.

At this date, no such evidence exists for PFP. For PFP to reduce costs, three conditions must be met. First, PFP must be shown to improve quality. Second, the quality improvement must be shown to reduce costs. Third, the cost savings caused by the quality improvement must be shown to exceed the cost of implementing PFP. Studies documenting all three of these conditions have not been published in peer-reviewed journals. (7)

POINT 2: IF THE FORUM IS GOING TO ADD QUALITY IMPROVEMENT TO ITS MISSION STATEMENT, IT SHOULD FOCUS FIRST ON OTHER SOLUTIONS

If the Forum decides, however, that quality improvement is part of its mission statement, then the Forum should make sure that it gives high priority to factors that contribute substantially to degraded quality of care, including managed care (to be specific, capitation and other methods of pay-for-denial-of-care, as well as utilization review), the nursing shortage, and the absence of universal health insurance. The evidence implicating each of these factors in reduced quality of care is extensive. MPPA would be happy to deliver papers to the Forum documenting this statement if we are asked.

POINT 3: PAY FOR PERFORMANCE IS UNLIKELY TO WORK AS ADVERTISED

Overview

PFP is unlikely to work for the vast majority of medical services provided to patients. There are several reasons for this, the most important of which is the very low probability that experts will ever develop accurate report cards for the vast majority of medical services. The reason why accurate report cards are required for PFP is obvious: An insurer cannot pay doctors for better or worse performance unless the insurer can grade performance.

Report cards are based on one or both of two types of quality measures: measures of outcomes, and measures of processes used in treatment. An example of an outcome measure is mortality rates among patients who had coronary artery bypass surgery. Another example is cholesterol levels, which falls into a category labeled by some as "intermediate outcomes." Examples of process measures include prescribing beta blockers for patients who have suffered a heart attack, and ordering blood tests to check cholesterol levels in diabetics.

Patient satisfaction surveys are rarely accurate, but, accurate or not, they can pose questions designed to measure both outcomes and processes. The question, "Was your health improved by your care?" may be construed to be an outcome measure, while the question, "Did the doctor listen to you?" would fall into the process measure category.

Outcome measures are very expensive (in terms of dollars and lost privacy) because they have to be adjusted to reflect differences in patient health and other factors beyond physician control (a process known as "risk adjustment"). Process measures are usually expensive because they require agreement on standards of care, which do not exist for thousands of medical services. Some process measures must also be risk-adjusted.

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