Another Pay-for-Performance Bust

By April 2, 2012 Commentary

A study published in the New England Journal of Medicine tracks the results of Medicare’s Premier Hospital Quality Incentive Demonstration, which was supposed to improve patient care by providing incentives for better quality.  The demonstration ran for six years and the study looked at 30-day mortality rates for hospitals that participated over the entire six-year period.  Previous research had suggested a modest effect of the demonstration on processes of care, but had not examined actual patient outcomes.  A total of 252 hospitals were in the demonstration, which required them to provide data on heart attack, congestive heart failure and pneumonia as well as knee or hip replacements and coronary artery bypass grafts.  Top performing hospitals could get bonuses and the worst performing got penalized.  These hospitals were compared with the hospitals participating only in Medicare’s pay for reporting program, which collected data on the same measures.    (NEJM Article)

The basic finding was that mortality was identical at both groups of hospitals and mortality declined at the same rate in both groups of hospitals during the study period.  For each of the three medical conditions, mortality was the same across groups, but for CABG mortality was actually slightly higher in the Premier group.  There was no difference in performance for the conditions that had specific additional incentives tied to them.  So even after 6 years of participation, there was no improvement in mortality outcomes for these conditions among hospitals participating in the demonstration versus those only doing public reporting of measures.  Any way you cut it, these results suggest that CMS was rewarding, or punishing, hospitals for performance that made no difference in outcomes.  It could be that the wrong things are being measured, it could be that mortality can’t really be affected that much by hospital care, but whatever the reason, these kinds of research results suggest that the whole pay-for-performance, value-based purchasing movement may be a waste of time and money, and that it has providers focused on the wrong things and raises their administrative costs.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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