Payment Changes: A Catalyst for Quality

Abstract

QUALITY MEASUREMENT: THE PAST AS PROLOGUE Nothing changes behavior in healthcare faster than a change in reimbursement. The introduction of DRG reimbursement in the early 1980s and the subsequent rise of managed care and preauthorization of inpatient admissions effectively drove down inpatient utilization in hospitals throughout the country. The new payment mechanisms being piloted in healthcare reform legislation, such as bundled payments and accountable care organizations, are meant to further reduce utilization. Although these mechanisms and structures will affect physicians and other providers across the continuum of care, hospitals will be the first to feel the pressure on revenue. The new payment mechanisms shift payment from volume to value, or quality-based measures. As Rutledge, Huber, and Mathews point out, the Institute of Medicine's (IOM's) seminal 1999 report, To Err is Human, was a major catalyst for the emphasis on quality in our healthcare system. Amid a sea of statistics in the healthcare industry, the IOM statement that up to 98,000 people die in hospitals each year as a result of medical errors that could been prevented impelled many hospitals to work toward resolving the problem immediately. Pilot projects of early clinical performance improvement initiatives, such as those in which CaroMont Health participated, began to establish healthcare quality metrics. But in the 1990s, the paper-driven healthcare system lacked defined measures and the means to capture the necessary data. Gathering quality data was a labor-intensive effort that was inherently subject to error. Physicians, hospitals, and other healthcare providers pursued quality improvement as the right thing to do, but there was no systematic way to measure quality. As recently as 1998, The Joint Commission's ORYX initiative required only the reporting of nonstandardized data on performance measures. In 2002, accredited hospitals were required to collect and report performance data for just two core measure sets (from a total of four). Over the past decade, changes in quality measurement have been breathtaking, say Chassin and colleagues (2010) in a recent New England Journal of Medicine commentary that traces the history of the use of accountability measures to promote healthcare quality improvement. Today, hospitals provide data to The Joint Commission from a selection of 57 inpatient measures, of which 31 are publicly reported. And the National Quality Forum has endorsed more than 600 quality measures. Although this progress in data collection and reporting can and should be celebrated, it has yet to translate to significant improvements in clinical quality outcomes. In June 2010, the Commonwealth Fund released the latest in a succession of reports showing that the United States ranks last overall, compared with selected other industrialized countries, on measures of healthcare quality, efficiency, access to care, equity, and the ability to lead long, healthy, productive lives. That report comes on the heels of the Agency for Healthcare Research and Quality's 200C) National Healthcare Quality Report, which found that the median rate of improvement on 33 core measures of quality was just 2 percent per year. Ultimately, real change in healthcare is not achieved until providers' efforts are rewarded or penalized by the payment system. Links between quality and payment started when the Centers for Medicare & Medicaid Services (CMS) began to mandate reporting of its defined quality metrics and imposing payment penalties on hospitals that failed to provide these data. CMS progressed to publicly reporting the results, ushering in a new era of transparency (although relatively few patients understood the data) and allowing hospitals to compare their performance data with those of other organizations in a somewhat standardized way. However, until recently, payment was still tied only to the requirement to report - not to performance. …