The Quality Report

Improving Health Care Value Through Payment Reform

RWJF Initiatives Explore the Way Providers and Insurers Do Business

Looking at the array of national health reform proposals being touted in Washington, D.C., it is increasingly clear that any successful change will ultimately include restructuring the way we pay for care. A fundamental flaw of our health system, many say, is that it encourages volume-driven rather than value-driven health care. We pay providers for “doing things,” rather than rewarding them for delivering quality services that are proven to keep people healthy, reduce errors and avoid unnecessary care.

The result has been a system with widespread deficiencies, skyrocketing costs, poor value and even poorer quality. Americans pay more for health care, but face worse health outcomes, than people living in other developed nations. Year after year, costs climb at double the rate of inflation–all while quality fails to keep pace. Today, almost 95 cents of every health care dollar is spent on acute care for people who are already sick, most suffering from one or more manageable chronic illnesses. But only half of these acutely ill patients will receive the recommended care for their condition.

One analysis by a Robert Wood Johnson Foundation (RWJF) grantee found that up to 40 percent of spending across some of the most common chronic diseases, such as diabetes and asthma, is related to potentially avoidable complications (PACs)–deficiencies in care that cause harm to the patient, yet might have been prevented through more proactive care.

RWJF’s Quality/Equality strategy supports a wide range of initiatives on how we might reform the ways we deliver and pay for health care. On the payment side, we believe that health care professionals should be rewarded for giving patients the right care at the right time, and that oftentimes, providers are not compensated for giving care that could actually result in better outcomes for the patients. For example, providers are rewarded for volume, not quality–which is why doctors and nurses often feel rushed in their direct contact with patients.

From the development and testing of the revolutionary PROMETHEUS Payment model exploring bundled payments for care, to the groundbreaking research that shows the full extent of our payment and delivery challenges, RWJF supports reforms that tackle every aspect of our health care system.

As we enter this once-in-a-generation effort to reform health care, we must ask: How much does health care really cost, and what do we get in return? This seemingly simple question has long been impossible to answer, but tackling it through payment reform could quite possibly hold the solution we seek. At RWJF, we believe that valuable solutions and insight will emerge from the work we support.

Update: Aligning Forces for Quality

A lot is happening in the Aligning Forces for Quality (AF4Q) communities this fall as the health reform movement in Washington, D.C., sparks local debate. AF4Q is RWJF’s signature effort to improve quality, reduce racial and ethnic disparities and serve as laboratories for potential reform in 15 communities nationwide. In Kansas City, consumers are now able to easily compare the quality of care provided by doctors practicing in their region. The Kansas City Quality Improvement Consortium (KCQIC), in partnership with the Consumers’ CHECKBOOK/Center for the Study of Services, recently released an online report on the experience of care provided by local doctors. The results are based on a survey of 40,000 Kansas City area residents who reported on their recent experiences with over 700 primary care doctors. Overall, patients gave their doctors high marks for communicating effectively and treating them respectfully.

The online report helps consumers make better decisions about their health care, and encourage care organizations to develop programs to improve the quality of care.

Check out the KCQIC survey results.

In South Central Pennsylvania, residents of York and Adams Counties who suffer from diabetes and heart disease pledged to take the “I Can!” Challenge–part of Aligning Forces for Quality South Central Pennsylvania’s mission to eliminate the gap between the quality of care that patients with chronic conditions currently receive and the quality of care that patients should expect to receive. Five individual challengers publically shared their experiences weekly on Fox43’s News at 10. Employers, organizations and people throughout the region participated in the 12-week challenge to learn:

healthy eating habits;
how to communicate effectively with doctors;
tips to reduce alcohol and tobacco use;
strategies to relieve stress; and
information about quality health care (including provider performance information) and about their conditions.

Visit the “I Can!” Challenge Web site.

RWJF Selects 15 Hospitals to Participate in National Quality Improvement Collaboratives

RWJF recently announced the selection of 15 hospitals to participate in two new quality improvement programs as part of Aligning Forces for Quality (AF4Q). In total, 35 hospitals and health systems are now participating in the existing AF4Q quality improvement collaboratives.

Aligning Forces for Quality: Language Quality Improvement Collaborative will identify and test strategies for hospitals to provide more effective language services for their patients who speak or understand little English. In the pilot program on which the collaborative is based, participating hospitals saw a nearly 20 percent increase in the percentage of patients who received needed language services in a timely manner.

Aligning Forces for Quality: Equity Quality Improvement Collaborative will identify quality enhancements for the treatment of cardiac care patients, with an emphasis on reducing racial and ethnic disparities in care. It is based on RWJF‘s Expecting Success program, through which participating hospitals reported an average 37 percent increase in patients who received all the recommended care for heart failure.

Read the news release.

Latest from RWJF Quality/Equality

Catch up on the latest news releases, journal articles, research reports or other publications in the RWJF Quality/Equality program area.

NEJM: Getting Past Denial - The High Cost of Health Care in the United States

Many Americans believe we cannot afford to cover the uninsured, since doing so would require taxes to be raised beyond what the public can sustain. Others believe we can slow spending growth only by rationing needed care. This New England Journal of Medicine article from the Dartmouth Atlas project shows that regional variations in spending and growth point to a more hopeful alternative: health care costs can be contained by emulating regions with low costs and high quality.

Learn more.

Journal Study: Survey of Quality-Based Payment for Medical Groups and Individual Physicians

This study, published in the journal Inquiry, surveyed pay-for-performance incentives used by medical groups for primary care and specialist physicians. The survey found that performance bonuses paid by insurers to large medical groups are more prevalent than performance bonuses paid by the groups to the primary care and specialist physicians.

Read the study.

Improving Chronic Illness Care: A Longitudinal Cohort Analysis of Large Physician Organizations

While processes exist to provide better care for chronic illness, for the most part, they are not used. This article from the journal Medical Care examines the change in use of commonly recommended chronic care management processes (CMPs) in large medical groups between 2000–2006, and seeks to understand the factors associated with the change.

Read the article.

Health Affairs: Medicare Governance and Provider Payment Policy

Medicare’s decision-making processes leave policies on provider payment vulnerable to “micromanagement” by Congress and the White House, according to this article published in Health Affairs. If they continue as they are, it could jeopardize delivery system changes central to current health reform proposals.

Learn more.

Health Affairs: Is Health Spending Excessive? If So, What Can We Do About It?

The case that the United States spends more than is optimal on health care is overwhelming. But identifying reasons for excessive spending is not the same as showing how to wring out savings that improve care. This Health Affairs article finds that to lower spending, it is necessary to identify what procedures are effective at reasonable cost and to design incentives that encourage providers to act on those relevant protocols.

Read the article.

Health Affairs: From Volume to Value - A Better Way to Pay

Today’s health care payment systems are based on rewarding volume, not value for the money spent. Two proposed methods of payment, "episode-of-care payment" and "comprehensive care payment" could facilitate higher quality and lower costs. This article from the journal Health Affairs discusses the most appropriate payment systems for different types of patient conditions and some methods of addressing design and implementation issues.

Read the article.

IOM Report Recommends More Detailed Categories for Race, Ethnicity and Language Data

Despite efforts to reduce racial and ethnic disparities in health care, gaps remain. A new report released by the Institute of Medicine (IOM) recommends that the U.S. Department of Health and Human Services (HHS) develop nationally standardized lists for granular ethnicity categories and spoken and written languages. In order to identify and eliminate disparities, health care organizations need to collect standard and more detailed information about patients’ race, ethnicity and English-language proficiency.

Learn more.

What are PROMETHEUS Payment Evidence-Informed Case Rates?

The PROMETHEUS Payment model seeks to ignite a transformation in health care payment by moving away from unit-of-service payment to episode-of-care payment. This two-page brief explains Evidence-informed Case Rates (ECRs), the core element of the PROMETHEUS Payment model. ECRs are bundled, patient-specific budgets that cover all treatments related to a single illness or condition. They offer a comprehensive solution to provider payment that can effectively account for the unique variables in each patient’s care.

Read the brief.

The Quality Report is a monthly e-magazine from RWJF’s Quality/Equality program area featuring the latest journal articles, research and publications, as well as updates from the Aligning Forces for Quality initiative, the Foundation’s core strategy in its longstanding commitment to improve the quality of health care that Americans receive.As a subscriber to the Foundation’s Quality/Equality content alerts, you have been automatically subscribed to The Quality Report. If you do not want to receive this alert, visit www.rwjf.org/services to manage your subscriptions.