The Institute of Medicine (IOM) has been working on a series of impressive reports over the past several years addressing the need to fundamentally modify our nation’s health care system, and particularly stressing the necessity of meeting patients’ needs based upon sound scientific evidence. The 2006 IOM report on Pay-For-Performance seeks to reform payment mechanisms that promote inappropriate or inefficient behaviors and that impede progress towards better quality care. The current system often rewards overuse of services, use of high-cost complex procedures, while not acknowledging the wide variations in quality across providers and service delivery sites. The critical psychosocial-cultural-economic gradient of health care is rarely considered a reimbursable service. Priority must be given to insuring high quality, patient-centered, efficient care. “The overall quality of health care delivered to Americans is worse than it should be. While many quality improvement efforts have been undertaken, their success has been limited by current payment systems. The existing systems do not reflect the relative value of health care services in important aspects of quality, such as clinical quality, patient-centeredness, and efficiency. Nor do current payment systems recognize or reward care coordination, an omission reflected in such shortcomings as the limited focus on prevention and the treatment of chronic conditions as patients move across various care settings. Fundamental changes in approaches to health care payment are necessary to remove impediments to and create incentives for significant quality improvement.” The underlying concept behind the Pay-For-Performance movement is a rational one; i.e., to provide additional payments to those providers and health systems which provide the highest quality of care, as determined by objective measurers. The United Kingdom initiated a Pay-For-Performance program for general health in April, 2004 with an investment in excess of $1.8 billion.

According to the IOM, there are six aims for health care that should guide quality improvement efforts – safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity. Our current payment systems do not align incentives to support the realization of these aims. The objective of aligning incentives through Pay-For-Performance – i.e., paying providers for higher-quality care as measured by selected standards, benchmarks, and procedures – is to create payment incentives that will:

• encourage the most rapid feasible performance improvement by all providers;
• support innovation and constructive change throughout the health care system; and,
• promote better outcomes of care, especially through coordination of care across provider settings and time.

Already more than 100 reward and incentive payment programs have been launched in the private sector. A major challenge confronting this approach is the fear that efforts to improve upon one domain of performance may lead to reductions in quality in other domains. Focusing upon Medicare, on average Medicare beneficiaries are treated annually by 5 physicians. Beneficiaries with certain chronic conditions see an average of 13 physicians annually. Enhancing care coordination is essential to improving quality.

There can be no question that information technology has enormous potential to be used as a transformative tool in systems change towards improving the quality of health care. Yet without clear standards, experimentation will likely continue slowly and in a piecemeal fashion. A high priority for the IOM is the need for transparency which will allow patients and their families to make truly informed decisions when choosing providers or among alternative treatments. The growth in expenditures and per capita health care spending in the United States far exceeds that in other developed countries and is expected to double from today’s level, reaching $4.1 trillion, or 16 percent of the Gross Domestic Product, over the next decade. Nevertheless, the U.S. still ranks in the bottom quartile of industrialized countries for life expectancy and infant mortality.

Informed patients deserve clear and understandable benchmarks, beyond mere processes, for determining the quality of care they receive and desire. Pay-For-Performance must be structured to promote higher-quality care and cost-effectiveness, but not at the expense of driving providers from the health care arena. Fundamentally, providers must believe in and accept the system not just because of the economic rewards they may receive, but because they believe in its ability to advance the quality agenda. This important goal will not be realized if action to achieve it is delayed by a lack of acceptance of program terms among providers or their training institutions. Systematic monitoring, evaluation, and research must be integral components of the overall system. A successful Pay-For-Performance program must encompass the elements of a true learning system, including having strong leadership, a shared vision, and an environment that allows for action in response to observations, including the opportunity to learn from mistakes. How, and who, will develop these objective measures of success is a critical question for psychology? Our practitioners are increasingly developing into an integral component of our nation’s overall healthcare system and are directly effected by national healthcare policies.

Aloha,

Pat

Pat DeLeon is a former APA President.