Regulatory Impediments to Pay-for-Performance

Federal laws are complex and made more complex by regulations enacted under the laws.  Health care has more than its share of federal laws and regulations to deal with.  So it shouldn’t be surprising that those laws and regulations sometimes conflict with each other or that one federal law or regulation ends up being a barrier to another federal initiative, much less private innovation in health care.  The Government Accounting Office finds that this is in fact the case in regard to pay-for-performance efforts, and also likely for value-based purchasing.   (GAO Report)  The Centers for Medicare and Medicaid Services has made these programs a cornerstone in its effort to turn payment from focusing solely on the volume of services delivered to rewarding provision of better quality and outcomes.  A large number of private payers have followed suit, beginning their own similar programs.  But the GAO found that one concern providers have is whether such programs may run afoul of federal fraud and abuse laws.  In particular, the GAO cites the Civil Monetary Penalties Law, which prohibits hospitals from paying physicians to reduce or limit services, and which the Office of Inspector General has interpreted, in its incredible wisdom, to apply to both necessary and unnecessary services!!  You can get exceptions through an advisory opinion process, but anyone who has gone that route knows what an expensive and lengthy effort it is.  The whole issue is simply absurd and illustrates the need to just repeal all the federal health laws and start over with something much simpler and with a little more logical basis. Among other things that might lower costs in the health system.