ROCHESTER, Minn. -- In the February issue of Mayo Clinic Proceedings, Mayo Clinic President and CEO Denis Cortese, M.D., and Chief Administrative Officer Robert Smoldt, call for a reimbursement system based on value rather than the current "pay-for-performance" system used by many insurers, including Medicare. A "Pay for Value" reimbursement system, as proposed by Cortese and Smoldt, would reward hospitals for achieving good patient outcomes at lower costs, thereby improving health care quality and restraining spending far better than "piecemeal" pay-for-performance plans that encourage adherence to evidence-based standards.
"The most basic measure of a hospital's quality starts with its patients' mortality, taking into account how sick they were when they were admitted," explains Dr. Cortese. "Did they live, or not? This risk-adjusted mortality varies significantly among hospitals, but very little of that outcome variation relates to compliance with these pay-for-performance process standards."
The authors suggest a "Pay for Value" model that would increase insurance payments to health care providers whose patient mortality and patient satisfaction — as measured by whether the patient would recommend the provider to a friend — are better than average, and whose costs over time are below average. Hospitals with worse outcomes, less-satisfied patients and higher costs would have their insurance reimbursements slightly reduced.
A study published in the Journal of the American Medical Association last year focused on the typical pay-for-performance approach so common today. In that article mortality variation among hospitals treating heart attack patients was examined. Differences in how well hospitals followed Medicare's key process guidelines, such as use of angiotensin-converting enzyme (ACE) inhibitors, only accounted for 6 percent of the risk-adjusted variation in patient survival. "We can't build a comprehensive enough checklist of process measures to yield the quality improvement our country needs," says Dr. Cortese. "To raise the quality of health care throughout the nation, we need to measure and reward outcomes and efficiency."
"Efficient providers delivering high-quality care at lower costs should be rewarded," Smoldt says. "You really do get what you pay for. If we continue to subsidize inefficiency by paying for more inputs, regardless of how much they contribute to better outcomes, we will keep seeing costs increase without a comparable quality improvement."
In their commentary, Cortese and Smoldt compare the actual performance of four teaching hospitals, identified as Hospital A -- Hospital D, in the western United States based on their value analysis, calculated by combining mortality and patient satisfaction, and dividing by a measure of total Medicare costs in the last six months of patients' lives. Hospital C was average in both outcomes and costs; Hospital D achieved significantly better outcomes at lower-than-average cost. Hospital A achieved respectable outcomes but at high cost, while Hospital B had both higher costs and poorer outcomes.
Under the authors' proposal, Hospital D would be rewarded with higher reimbursements, while a portion of the payments for hospitals A and B would be withheld to provide incentives for them to make necessary changes to improve outcomes and reduce costs so they would receive the full payments in the future.
"We need to align the incentives in the system to patients' interests," Dr. Cortese says. "They want good outcomes in a system that treats them respectfully, at a reasonable cost. They don't want expensive, invasive tests and procedures that aren't going to improve their lives. We need a system that focuses on the ends we're trying to achieve, not an incomplete menu of means."
"Pay for Value looks at both sides of the equation, quality and cost, and defines quality in a way that is meaningful to patients," Smoldt concludes. "Pay-for-performance projects have mostly focused on inputs and processes. To have a health system that delivers the best care to every patient over a lifetime, America needs a more comprehensive approach to the problem."
The commentary is available online at www.mayoclinicproceedings.com.
A peer-review journal, Mayo Clinic Proceedings publishes original articles and reviews dealing with clinical and laboratory medicine, clinical research, basic science research and clinical epidemiology. Mayo Clinic Proceedings is published monthly by Mayo Foundation for Medical Education and Research as part of its commitment to the medical education of physicians. The journal has been published for more than 80 years and has a circulation of 130,000 nationally and internationally. Articles are available online at www.mayoclinicproceedings.com.
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Mayo Clinic Proceedings