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Paying for Quality

Paying for Quality. Meredith Rosenthal, Ph.D. Department of Health Policy and Management Harvard University School of Public Health Boston MA October 21, 2004. New Programs to Reward Physicians and Hospitals. Quality of care in the U.S. is poor and not improving quickly enough

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Paying for Quality

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  1. Paying for Quality Meredith Rosenthal, Ph.D. Department of Health Policy and Management Harvard University School of Public Health Boston MA October 21, 2004 Rosenthal 2004

  2. New Programs to Reward Physicians and Hospitals • Quality of care in the U.S. is poor and not improving quickly enough • More than 50 new pay-for-performance programs put in place this decade by health plans, purchasers • Both physicians and hospitals to receive bonuses Reference: Health Affairs, Vol 23, Issue 2, 127-141 Rosenthal 2004

  3. Targeted Areas of Performance • Physicians rewarded based on care in 5-10 domains of evidence-based medicine • Structure (e.g., development of Information Technology infrastructure) and process measures typical • Patient experience/satisfaction often included • Hospitals rewarded on broader set of structure, process, and outcome measures (including staffing, complications, readmissions) Rosenthal 2004

  4. Quality Improvement • Quality improvement almost never targeted explicitly • Programs reward top performers (e.g., top 20% in market) or all providers reaching a fixed goal (e.g., 75% compliance with a benchmark) • Thus rewards pay for past achievements, may widen performance gap Rosenthal 2004

  5. Strength of Incentives • Typical payments for best performers set to roughly 5% of revenues from the sponsoring plan or purchaser • Incentive sponsors usually represent minority share of provider revenues • Will this be enough to spur necessary changes? Rosenthal 2004

  6. Concluding Thoughts • Pay-for-performance targeting broad set of domains has been widely adopted • Current programs may not be well positioned to result in dramatic quality improvements • No rewards for improvement • Relatively small dollar amounts Rosenthal 2004

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