Tag: "pay for performance"

Providers Are Smarter Than Insurance Companies

But you already knew that didn’t you? I usually disagree with Steffie Woodhandler and David Himmelstein but (like a stopped clock) they are occasionally correct. This is their view on why pay-for-performance doesn’t work:

Intensive coding — that is, embellishing diagnoses to maximize payment under per case or risk adjusted capitation schemes — also makes patients seem sicker on paper, and hence boosts risk adjusted quality scores. Under US Medicare’s DRG (diagnosis related groups) hospital payment system, recoding a diagnosis as “aspiration pneumonia with acute or chronic systolic heart failure” rather than simply “pneumonia with chronic heart failure” triples the payment and increases the risk score. Such “upcoding” is endemic among private health maintenance organizations that contract with Medicare for risk adjusted capitation payments, as well as among hospitals.

HT: Sarah Kliff.

Headlines I Wish I Hadn’t Seen

Licensed to Heal

This is David Henderson quoting Richard Thaler:

Pharmacists must be the most underemployed professionals. Lots of schooling to count pills. In France they actually do stuff.

David adds:

Milton Friedman … almost single-handedly, in the economics profession [the other one was the late Reuben Kessel] got the case against health-care licensing treated seriously with his chapter on it in Capitalism and Freedom.

Economists’ poll on health care licensing.

Myth Busters #3: Hysterectomies in Lewiston, Maine

One of the consequences of Roemer’s Law has been the idea of “provider induced demand,” and the general notion that everything that happens in health care is because some greedy doctor has deemed it. This means that patients don’t count. What patients may want is irrelevant.

Nowhere is this better illustrated than in Jack Wennberg’s early work on “small area variation” in medical practice.

I was working in the research department at Blue Cross Blue Shield of Maine from 1979 to 1984 and we offered the use of our claims files for his research. He had already done some work in Vermont looking at variations in the rate of tonsillectomies in various towns. He found that in some places physicians surgically remove tonsils at a much greater rate than they do in other places. He concluded that this was an example of Roemer’s Law in effect — scalpel-happy physicians were too quick to order up surgery in some places, but not in others.

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More Bad News on Pay-for-Performance

We examined the effects in 260 hospitals of a pay-for-performance demonstration project carried out by the Centers for Medicare and Medicaid Services in partnership with Premier Inc., a nationwide hospital system. We compared these results to those of a control group of 780 hospitals not in the demonstration project. The performance of the hospitals in the project initially improved more than the performance of the control group: More than half of the pay-for-performance hospitals achieved high performance scores, compared to fewer than a third of the control hospitals. However, after five years, the two groups’ scores were virtually identical.

See full Health Affairs study.

More Evidence Against EMRs, and Other News

More evidence that EMRs are not improving the quality of care.

Medicare Chief Actuary: Claims that ObamaCare will reduce medical costs are “false, more than true.”

Another disappointing study result: Pay for Performance doesn’t work.

Bad News for ObamaCare, and Other News

Bad news for ObamaCare. Pay-for-performance is Massachusetts isn’t working.

More bad news: making preventive care free leads to more utilization. State mandates increased  mammograms by 800,000 over 14 years.

What health care rationing will really be like. Very funny video.

Prime Minister: National Health Service is “second rate.” Apparent gaffe.

Very funny explanation of medical loss ratios. (video)

Two more videos on ObamaCare and concierge medicine: Here and here. (HT to Ralph Webber)

Where Fee-For-Service Works Best

This is from a study by Helmchen and Lo Sasso via Austin Frakt:

Using a four-year [2003-2006] sample of 59 physicians and 1.1 million encounters, we study how physicians at a network of primary care clinics responded when their salaried compensation plan was replaced with a lower salary plus substantial piece rates for encounters and select procedures. Although patient characteristics remained unchanged, physicians increased encounters by 11 to 61%, both by increasing encounters per day and days worked at the network, and increased procedures to the maximum reimbursable level.

The extra payment that so dramatically increased encounters was $5 for each reported performance of an eligible procedure.

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A Devastating Review of Pay-for-Performance

Based on numerous studies reviewed here, pay for performance and public reporting benefit third parties but put patients at risk. Compliance with “best practice” standards does not improve patient outcomes. Adverse effects include physician avoidance of high-risk patients and system gaming by physicians and hospitals. These effects have a disproportionate effect on patients in minority and lower socioeconomic groups. Administrative and claims source data used in such programs are often inaccurate and invalid. Risk-adjustment methods are not adequate to fully account for the complex features of the highly variable patient population in the United States…

While the AMA has promulgated stringent Principles and Guidelines on PFP, these are often forgotten or blatantly ignored as third-party payers (employers, health insurers, and government regulators) feel increasing pressure to do whatever they can to control their escalating costs.

Full report by David McKalip in the Journal of American Physicians and Surgeons.

Hits & Misses – 2009/9/29