P4P Healthcare

This is convocation season, and I have been spending time with healthcare experts from around the country. These are not economists (no offense intended) but the nuts-and-bolts people who keep the system running and who have the most informed opinions on policy, IMHO.

The “newest new thing” is Pay For Performance, known to many of us as “P4P.” This is being championed by the feds within DHHS/CMS (Medicare and Medicaid). If successful, it would likely spread through the entire system.

P4P, an attempt to link quality with payment, raises a zillion questions, and those questions must be addressed before there is any large scale roll out. A full list would be way too long, but here are a few. The intent is better quality while holding the line on costs (or at least slowing the escalation). So……

How do we define quality, how do we measure quality?

How do we fund and build the extensive IT network necessary? (#1 problem, in my opinion)

Do we focus on certain conditions (diabetes, asthma, COPD, osteoarthritis) or attack everything? If focused, how do we choose?

How do we account for non-compliant patients? (another huge problem)

How do we factor in geriatric patients, who are not going to markedly improve? What quality measures do we use?

How do we reconfigure regulatory barriers (federal regulations in particular, such as Stark I and II, CMP, anti-kickback, anti-trust, etc.) that prohibit the kind of doctor-hospital collaboration we would need to make the system work?

How do we reform malpractice, which is a major healthcare cost driver?

This may seem like a lot of technical gibberish, but it is where real reform of healthcare will likely occur. Question is, how do we get providers to buy in, and how do we get taxpayers to pay for the infrastructure to support this system? And then, will it work?

Is this the correct approach, or do we need something more radical? Or do we need to combine multiple concepts? Your thoughts?