How pay-per-performance can change the health care landscape

Nikolas Matthes, SPH '98, and Laura Morlock, A&S '73

Image: Photograph of Nikolas Matthes courtesy of Nikolas Matthes/ Photograph of Laura Morlock by Marshall Clarke

Suppose that at First Rate Hospital, hip surgery patients are usually up and using a walker within three days. Across town, at Shoddy Hospital, blood clot and infection rates often prevent hip surgery patients from healing as quickly. Should both hospitals receive the same insurance payout?

If you say, "No way!" you're not alone. The federal government, through the Affordable Care Act, has begun paying health care providers based on how good their services are. There's just one problem: How in the world do you measure that?

That is a question that Nikolas Matthes, SPH '98, strives to answer through his work measuring health care performance at Press Ganey Associates, a health care advisory services and consulting organization. The former physician earned a degree in the social history of medicine before coming to Johns Hopkins, where he met his faculty mentor, Laura Morlock, A&S '73, during his master's program at the School of Public Health. These days, the two are colleagues, with Morlock serving as the school's associate dean for education while Matthes teaches a course on health care quality measurement.

Recently, the two sat down in Morlock's office to discuss how the way we measure data can ultimately affect the quality, efficiency, and the value of care patients receive.

Laura For a very long time, the U.S. health care system focused solely on measuring how care is delivered. But more and more, there is interest in patient care outcomes. Are patients getting better from a clinical standpoint? If they have a disability, is that disability improving? How satisfied are they with the care they received?

Most recently, Obama's health care reform has increased the amount of interest in patient outcomes and precisely how they should be measured.

Nikolas If you want a perfect methodology, you'll never get there. You have to drive the field forward by just putting sometimes-imperfect measures out there. And that's the approach that Medicare and Medicaid have taken; they are already determining reimbursement according to readmission rates for patients who have a heart attack, heart failure, or pneumonia.

It's like, "Ready or not, these are the measures we're implementing." If organizations aren't meeting these new quality measures under pay for performance, they could lose up to 6 percent of their usual Medicare payment. That's not just pocket money. That's significant.

The goal is to create momentum so that private insurance companies will follow the lead of successful reforms in Medicare and Medicaid. Several pay-for-performance programs have already been implemented by private insurers around the country.

But hospitals are very challenged with the readmission measurements because they say, "I don't receive payment if the patient gets readmitted within 30 days, but can I control what the patient does after he or she goes home? Can I control whether the patient goes to his follow-up appointment? The hospitals believe they should really only be held accountable for those things that are in their control.

L Another good example is that we now have accountable care organizations, groups of health care providers that team up to care for Medicare beneficiaries. ACOs bring together an integrated framework that can include a hospital, a physician, and a variety of different types of rehabilitation and social and home care services. The idea is to think through a more integrated, individualized approach that is more patient- and family-centered.

But how do we do this in the most cost-effective, efficient way? To determine this, we need a very, very good integrated data system. So, data collection and measurement are becoming an important part of the puzzle of how we put together coordinated, integrated care deliver y that enhances patient outcomes.

N With the accountable care organizations, of course, there is also a different payment model that goes with them.

In our existing fee-for-service model, if you have a hip replacement, you'll pay for the hospital, the anesthesiologist, the surgeon, physical therapy, the follow-up visit, and the painkillers, all separately.

But in the new model, the idea is the insurance company will give the ACO a lump sum of money for a given service, say $20,000 for a hip replacement. That money is then divided among them. And if they can break even, good. If they can't, that's just too bad.

So, now ACOs are being watched closely, as a lot of the financial risk is now shifted over to them, to make sure that the quality of care provided isn't compromised. Before it was like an open check, regardless of what went wrong. But now, some of the financial risk is shifting from the insurers toward the ACO, meaning the physicians' offices and the hospitals. And that's a very big change in the health care system.

L It's important to be able to measure what is happening during this change. Right now, millions of people who did not have insurance are moving into the health care system as insured patients. We have to be able to make sure that they have access to this system and that they're receiving high-quality, efficient health care services.

It becomes increasingly important to develop better measures so that we can monitor how the experiences of patients are changing.

N Health care reform tackled one big player, the insurance industry, by changing how insurers pay providers, but it hasn't really reformed the pharmaceutical industry or the hospital sector yet.

What health care reform does for the insurance industry will, eventually, have a domino effect. It will force hospitals and providers and the pharmaceutical industry to reform in order to survive under this new system.

Posted in Voices+Opinion, Health

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