News flash: Higher Quality Care May Actually Cost More Money

There was a Dutch study published last week showing that providing better quality care, in this case to smokers and obese patients, raises the cost of health care because it prolongs the lives of patients (here's the Boston Globe article and here's the actual study). Prolonging lives means they need care for longer periods of time and they die of diseases that are more expensive to treat -- unlike lung cancer, for example, for which there is no treatment, which makes it a relatively cost-effective way to die; better still, using this calculus, would be getting hit by a Mack truck. But I digress....

Anyway, the study has been actively blogged on the WSJ health blog already, but one angle I haven't seen discussed is the impact of this on health insurance dynamics. A not uncommon refrain among commercial health insurers is that their investments in quality improvement are reaped mostly by Medicare, because the benefits of healthier enrollees don't really pay off until those enrollees are older and mostly off commercial insurance. The Dutch study suggests that for certain conditions the opposite is true -- higher quality care may increase costs to Medicare (and Social Security) by increasing the fraction of people who live to draw on Medicare (and Social Security) benefits.

States like Pennsylvania and Vermont have adopted the chronic care model as state policy, not only to promote better quality lives for their citizens, but also on the assumption that there are cost savings down the road. The National Quality Measures Clearinghouse has literally thousands of quality measures, and the drumbeat of quality improvement is beating louder and louder every day. Yet, the Dutch study and work by the Partnership for Prevention suggest that the economics for universally applied quality improvement just aren't there.

A real moral dilemma for our society could come with the realization that the Dutch findings may be more generally true -- it may actually cost more to get higher quality care. David Cutler has argued that we should spend more on health care because the marginal returns are so high, and measured in lives saved and pain avoided, that is certainly true. But we live in a reimbursement system where costs are vigorously monetized but benefits aren't, and literally no one has an incentive to put in more money for anything. Funding longer lives and less pain for all will be much easier said than done.

Yet another plug I should have made.....

OK, so I'm still catching up. There's another shout-out that I keep meaning to make. The Partnership for Healthcare Excellence launched their website a couple of weeks ago. If you live in Massachusetts and haven't heard of them yet, you will soon.

Every Health Economics 101 class begins with a description of the basic tenets of competitive markets (many suppliers and demanders, homogeneity of products and services, full information, yada yada yada). The class then goes on to show how the health care delivery sector violates every tenet.

Health care markets deviate from the theoretical definition in a few ways. For example, consumers don't have enough incentive to worry about value-for-money (because insurance shields them from transaction prices), and they depend on their suppliers (ie, medical professionals) to tell them what services they need. Some of this deviation is structural -- the health care market is never going to operate like the auto or cereal industries because the stakes are too high and the services are too complex.

There is now a push for more tranparency in health care, which is edging the entire industry toward performance measurement and public reporting. The Massachusetts Health Quality Partners is one of the country's leading efforts in this area, the Massachusetts Quality and Cost Council is gearing up for more public reporting, and a bunch of states are already publishing reports on quality measures, hospital infection rates, costs, and medical errors (among them are Vermont, Pennsylvania, Florida, Missouri, Indiana, New Hampshire, and Massachusetts).

The real question, though, is whether consumers will make use of this information. Some believe that consumers will never act on such information, so it's a waste of time and effort. Others agree that consumers will never act on such information, but if their medical professionals will or their employers will, it's still worthwhile. Regardless, the hope is that public reporting will affect consumers in some way, whether directly or indirectly.

Employers can act as smart purchasers on behalf of patients to a certain extent, by locking in financial incentives to behave in certain ways and by demanding more from their health insurers or providers. The Group Insurance Commission tiers physicians and hospitals, for example, and structures financial incentives accordingly. Putting boundaries around what patients can demand will only get us so far, however.

What we'd all like to see is patients individually acting both as better consumers of their health care dollars AND better users of the health care system. Yet, it's hard for them to do this on their own -- our health care delivery system is too complex, and they've already become accustomed to playing a certain role in the physician-patient relationship. Actionable education is the key to bringing about this change, and that's where the Partnership for Healthcare Excellence comes in. Check out their site -- you might just learn something.....

Medicare takes the plunge

Medicare will soon stop paying hospitals for the cost of treating "preventable errors, injuries, and infections that occur in hospitals" according to a front-page story in yesterday's New York Times. I'm not an expert in this area, but my naive observation is that this single policy change will mark the beginning of dramatic changes in health care reimbursement -- and perhaps health care delivery -- in the coming years. (Plenty of experts have weighed in on this -- Paul Levy has some links to them).

Commerical plans have been slowly but surely moving into the so-called P4P era of reimbursement, and Medicare is making its way there as well (David Harlow last week posted an excellent summary of Medicare's programs -- CMS forges ahead with pay-for-performance (P4P) initiatives). Up til now, the P4P conversation hasn't focused much on safety. There's been plenty of attention given to voluntary efforts and reporting on safety at the state and national levels (e.g., in Pennsylvania, Massachusetts, Indiana, and IHI's various campaigns). And, of course, there's Beth Israel Deaconness Medical Center which, under the leadership of Paul Levy, has been taking the lead in this type of reporting. But this focus on reporting and prevention had not really penetrated the conversation on payment and incentives. Until now.

On the face of it, the issue seems pretty straightforward. I pay you to do something, and if you screw up along the way, you should pay to fix the screw-up that you created. In practice, of course, it's much more complicated. A couple of issues that come to mind are:

Measurement. Are there clear ways to distinguish preventable from non-preventable errors? The issue is both with respect to categories (e.g., central line infections but not other types of infections) and threshholds (e.g., zero tolerance vs deviations from a baseline). If it's like most measurement, the majority of cases will be relatively easy to categorize, but some won't, and this minority of cases will constitute 90% of the measurement effort and 100% of the pushback.

Payment. Who's going to pay for the treatment of preventable errors? While we'd like to think of these as potentially zero-incident events, we live in a messy world, and statistically it's never going to be zero. So, let's say I suffer a "preventable error" in the hospital, and my insurance carrier tells the hospital that they're not paying for my treatment. Well, who does pay at that point? Supposedly the Medicare rules are going to say that the hospitals can't pass this cost to the patient. Is the hospital on the hook for the payment? What if the error was caused by a physician who isn't a hospital employee -- is s/he responsible for the payment? Will hospitals and physicians have to take out more or a different type of insurance to cover such payments? Will their malpractice liability exposure go up if Medicare determines that a particular patient suffered from a preventable error? Will their malpractice insurance premiums be affected if Medicare determines that they caused preventable errors, even if no litigation arises from the incident?

I don't think these complexities are show-stoppers -- after all, health care reimbursement addresses very complex issues every day (the new 2008 rules on inpatient prospective payments are over 2000 pages long -- and that's just this year's changes). I think this is a watershed moment in health care financing because it constitutes a real step away from the current "cost-plus" paradigm of reimbursement. I don't count current P4P efforts as real change because there's much more smoke there than fire owing to weak measures, dubious connections between those measures and actual quality, and correspondingly, shallow financial incentives.

Not paying for preventable errors seems different than current P4P efforts because it's something that patients/consumers (and the media) understand, it deals with reimbursement at the individual case level rather than the patient panel level and, finally, there's real money on the table. The fact that Medicare is taking this step is perhaps the biggest news of all. Medicare is the biggest player in the health care market, and commercial plans are generally loathe to make fundamental changes in reimbursement approaches without Medicare's participation because they don't want to "go it alone" against physicians and hospitals, and because their efforts are ineffectual anyway if they are diluted or contradicted by Medicare policies. Medicare's making these changes gives commercial plans the cover and the incentive to make more far-reaching changes in their own reimbursement approaches than they've been willing or able to make for a very long-time.

Breaking it to the American public

Sunday's New York Times had an excellent editorial: "World's Best Medical Care?" The article begins as follows:

Many Americans are under the delusion that we have “the best health care system in the world,” as President Bush sees it, or provide the “best medical care in the world,” as Rudolph Giuliani declared last week. That may be true at many top medical centers. But the disturbing truth is that this country lags well behind other advanced nations in delivering timely and effective care.

Most health care professionals already know this to be true. It's also true that we lag behind most of those same countries in the use of health IT. The connection between health IT and quality is pure correlation at this point -- no one has proven causation. Health IT won't be a panacea anyway -- most "wired" physicians I've worked with point out that the technology has only revealed for them how much the technology can't fix and how deep our problems really are.

Looking across countries, I'll bet that greater IT use is not a cause of greater quality, but rather, it's an indicator of a better health care system. Those systems have aligned incentives in a way that encourages not only IT tools but a whole host of processes and behaviors and tools to improve quality, safety, and efficiency -- exactly the opposite of the incentives in the U.S. system. Doesn't mean that adding health IT won't improve the U.S. -- I think it will. But we shouldn't kid ourselves about the fact that we're sub-optimizing -- until we have a health care system that is fundamentally oriented toward improving the quality, safety, and efficiency of care, we'll continue to be outperformed by our peers, regardless of how much technology we put in place.

A sober discussion on the state of health care

The March 2007 issue of Boston magazine ("Here's to your health") has a fascinating roundtable discussion on health care delivery in Massachusetts led by Jerome Groopman (local physician and writer for the New Yorker), and including:

• Paul Levy (Beth Israel Deaconness Medical Center)
• JudyAnn Bigby (MA Secretary of HHS)
• Paula Griswold (MA Coalition for the Prevention of Medical Errors)
• Charlie Baker (Harvard Pilgrim Healthcare)
• Kathleen Davidson (formerly of Boston Medical Center)
• Victoria McEvoy (MA General West Medical Group)
• Teresa Schraeder (New England Journal of Medicine)
• John Wong (Tufts-New England Medical Center)

(It looks like Boston delays on-line availability of its current issue, so if you want to read this in the near future you'll have to either buy it or speed-read it while you're in line at the grocery store).

Among a lot of interesting threads in the discussion was the following:

• Quality measurement is difficult in part because physicians currently resist measurement, rightly (Bigby), wrongly (Levy), or innately (Baker);
• Financial incentives that differentiate among physicians using quality measures are problematic because they are too crude (McEvoy), or they measure the wrong things (Groopman, Bigby);
• One of the biggest problems in health care is that we don't devote enough resources to primary care (Groopman, McEvoy, Baker, Levy), but we're not going to get new money into the system, and reallocating funding from specialties to primary care is pretty much impossible unless Medicare does it first (Baker);

The biggest disconnect (I couldn't tell if it was a real difference of opinion) was on the issue of whether the system is in crisis because of too much change or too little change.

Making the case for too much change, Schraeder argues that the intrusion of "industry" into what has traditionally been been a "non-profit public service" has taken control away from physicians, which presumably has hurt the quality, safety, and efficiency of care. (Schraeder's assertion is only true if you think of independent physicians as being "non-profit" which, of course, they're not.) McEvoy argues that current quality measures imposed by insurers are distorting care away from higher quality, by forcing physicians to spend too much time on the wrong things (and collect data on the wrong things), and not enough time listening to and managing patients.

On the other hand, others argued that the problem is that we've had too little change. Groopman notes that physicians misdiagnose patients perhaps 20-25 percent of the time in the traditional model. Though the Boston article doesn't elaborate on this point, Groopman's article (What's the trouble?) in the January 29 issue of the New Yorker does. In it he describes how snap diagnoses that often turn out to be wrong are the result of traditional and long-standing physician training and decision-making approaches. Not, as McEvoy suggests, from being forced to see too many patients or from the need to fill out templates. Furthering the argument that we need more change, not less, Wong points to the now well-known results from "How good is the quality of healthcare in the United States?" that we only get good care 50 percent of the time.

At one point in the discussion, Charlie Baker noted that the problems of health care are "profoundly more difficult than most people realize." After reading the various viewpoints in this discussion, I think that Baker is a wild-eyed optimist....

MHQP leads the way!

Karen Davis, President of the Commonwealth Fund, has released a report on Models for Achieving the Best Health System in the World. She highlights seven key strategies for improving the US scorecard on high performance health, and gives concrete examples of each.

This is generally a great read, but there's one item in particular that I want to call out. Here's number 5:

5. Increase Transparency and Reward Quality and Efficiency

Increase Transparency Case in Point: Massachusetts Health Quality Partners Increase Transparency

Public reporting of information on the performance of health plans and providers can spur improvements in quality and efficiency, by helping consumers make more informed decisions and by stimulating providers and plans to be more accountable for their results. It can also form the basis for new payment systems that reward providers for excellence and efficiency. Commonwealth Fund surveys indicate that most patients do not have access to the cost and quality information that would enable them to make informed choices, but they very much want access to such information.

Yet, a number of notable initiatives provide purchasers, consumers, and providers themselves with information about quality. With Commonwealth Fund and Robert Wood Johnson Foundation support, Massachusetts Health Quality Partners (MHQP) has publicly released clinical quality data as well as patients' ratings of their experiences with doctors' offices throughout the state. In addition, data on the clinical performance of primary care physicians in Massachusetts are now publicly available at the medical group level.

MHQP is a member of the MAeHC Board of Directors and key partners in our work going forward. Congratulations to Barbra Rabson and the entire MHQP team!

"Transparency", or, the emperor has no clothes....

Government Health IT has an article this week on Medicare's new incentive program for quality reporting ("Quality movement gets boost from Congress"). It describes legislation signed into law in December that will give a 1.5% bonus to Medicare providers who agree to give quality data to the government. This isn't quite P4P, because physicians get the bonus simply for submitting the data, regardless of what the data might show.

This is Medicare's third foray into this type of data collection. The first was DOQ-IT, which provided free EHR implementation consultations to physicians who agreed to give quality data to Medicare. Second, was the Physician Voluntary Reporting System.

Neither of these earlier efforts have made any notable headway on the data collection front. DOQ-IT has spent years trying to create the data collection infrastructure with little, if any, real success (though DOQ-IT's EHR implementation support program has done well and is quite good). And as for the Physician Voluntary Reporting System, well, the name says it all.

This new 1.5% bonus is barely a step above a voluntary system. Since Medicare accounts for about 16% of the insurance market nationally (95% for over-65s), the return to the "average" doc would get diluted down from 1.5% to 0.2%. I have yet to meet a physician who hasn't already done this math in his or her head and decided that it's just not worth it.

All of this has a corrosive effect on the health IT movement. It undercuts those of us who have been arguing that you can't have meaningful P4P without health IT, and you won't get health IT without P4P -- after all, if health IT and P4P really are valuable, wouldn't the biggest payer in the country invest real money in them?

The federal government has put shockingly little money into health IT to date (Blue Cross Blue Shield of Massachusetts has invested more in EHRs than the federal government has). We won't see real progress in health IT at the national level until Medicare puts real incentives and real money into play, because they have a lot of funding and, more important, when they do it others will fall in line.

The latest healthcare catch-phrase from the federal government is "transparency". Unfortunately, the logic behind Medicare's approach to P4P and health IT couldn't be more opaque.....

Promising data on clinical performance measurement

A lot of us hold the faith that pay-for-performance will be key to getting wider adoption of health IT systems in physician offices. This faith rests on the assumption that we can get doctors to use EHRs to record clinical data in ways that are meaningful, easy to gather, and comparable across physicians and over time. An article in the most recent issue of the Archives of Internal Medicine highlights the opportunities and challenges here and I think will be just the beginning of a much richer and more realistic discussion of these issues.

The authors of "Assessing the Validity of National Quality Measures for Coronary Artery Disease Using an Electronic Health Record" looked at quality measurement at a large internal medicine practice using a "commercial EHR" (they don't say which EHR they're using). They found that the actual performance of the physicians along several measures was better than their estimated performance, which was calculated from data automatically extracted from their EHRs. They conclude that:

"Profiling the quality of outpatient CAD care using data from an EHR has significant limitations. Changes in how data are routinely recorded in an EHR are needed to improve the accuracy of this type of quality measurement."

My reading of their study is that the authors raise legitimate concerns about the difficulty of using such data, but their conclusion overstates their case. They correctly point out that the real issues are not about technology, per se, but about process -- physicians don't routinely enter data in a way that makes it easy to do accurate calculations. For example, if you don't enter blood pressure readings as numeric data in the blood pressure fields of the EHR, you won't get "credit" for having taken the blood pressure.

More generally, they point to four sources of error:

1. Wrong diagnosis (ie, person diagnosed as having CAD when they didn't);
2. Data not entered as numeric or structured data (ie, they may have treated a person with aspirin, for example, but they buried that fact in a text note rather than entering it in the medication list)
3. Exclusion criteria are not standardized (ie, there's no standard way to record the fact that a patient may not qualify for the treatment in question, which shouldn't count against the physician); and
4. Measures don't account for patient non-adherence (ie, the patient doesn't comply with the physician's treatment decision, for example, doesn't take a lipid-lowering drug even though the physician recommended it and prescribed it).

Frankly, the only one of these problems that I find new and thus troubling is the third one regarding exclusion criteria, because the others are well known and they will become less severe over time as people get used to them. Entering consistent exclusion criteria is very complicated, however, because they are so measure-, condition- and patient-specific, there are no standards out there that I'm aware of, and the EHRs I'm familiar with don't have a good way to record this information systematically anyway. So, we need to figure out a way to address this issue.

That said, it's not clear how big these problems are in the scheme of things, however. It turns out that even with these problems, the automated measures performed pretty well -- the physicians were at 82% success on the measure they did worst on, which improved to 87% once corrections were made for the issues noted above. On the measure they did best on their scores went from 98% success to 99% after adjustment. While we'd obviously like these measures to be as accurate as possible -- particularly when quality and compensation are on the line -- this level of mis-measurement is surprisingly low given that we're really at the beginning of the beginning of clinical performance measurement.

Perhaps a bigger issue that the study doesn't address is what to do about so-called "ceiling effects." How are we going to tell the difference between physicians who are already high-performing? Is there really a difference between physicians performing at 98% vs 99%? And how do we tell the difference between physicians who are both performing at 100%? This suggests that we'll need increasingly granular measures to show variation in performance, if that's what we want to show. Or, do we just care that physicians get to an acceptably high level?

No one has any answers to this yet, of course, but the data from this study suggest that we may have to figure it out long before at least I thought we would. And doing this without having physicians feel that the goalposts are always being moved could be a much bigger issue than the technical arguments about measures that dominate the conversation today.