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Incentives and Value in the Quest to Lower Healthcare Costs

The theme of our latest blogs has been that more and more innovation isn’t what we need now. What we need is to identify, support and scale proven, existing innovation. We’ve been advocating that position from the perspective of ten years in the trenches of healthcare data integration and interoperability. We’re heartened to see our thinking reflected recently in work from prestigious institutions like the Harvard Business School Healthcare Initiative and other thought leaders in the field.

In this blog, we turn to evidence on the use of incentives and payment reform to motivate providers, clinicians, and, importantly, consumers to make changes in the areas known to drive immense healthcare costs.

Let’s start with the Catalyst for Payment Reform (CPR) definition of payment reform from The Payment Reform Landscape: Overview, by CPR Executive Director Suzanne Delbanco, published in the 2014 series in Health Affairs Blog that examines how different methods of payment reform are being employed and how well they’re working:

“While there are many different definitions of payment reform, Catalyst for Payment Reform defines payment reform as payment methods that reflect or support provider performance, especially the quality and safety of care that providers deliver, and are designed to spur provider efficiency and reduce unnecessary spending.  If a payment method addresses only efficiency, CPR does not consider it value-oriented — it must include a quality component.  Otherwise, how can we ensure payment reform has its desired effect of improving both the affordability and quality of care for patients?”

CPR Scorecard: Value-oriented payments to doctors and hospitals increases from 11% to 40%

On September 30, 2014, Catalyst for Payment Reform (CPR) unveiled some potentially exciting news:

Our 2014 National Scorecard on Payment Reform tells us 40 percent of commercial sector payments to doctors and hospitals now flow through value-oriented payment methods, defined as payment methods designed to improve quality and reduce waste.  This is a dramatic increase since 2013 when the figure was just 11 percent.
Traditional fee-for-service, where we pay for every test and procedure regardless of its value, may rapidly be becoming a relic.”

In-depth work is still needed on how pay-for-performance can consistently produce the value we desire: higher-quality care at affordable prices.  To that end, CPR cites a 2013 study conducted by Adams Dudley that revealed that pay-for-performance programs may work best when they are highly-targeted and the rewards go directly to individual clinicians.

Healthcare IT and recent Pay-for-Patient-Performance (P4PP) innovation

Just as rewards that go directly to individual clinicians may deliver the highest value, so might rewards that go directly to individual healthcare consumers and patients. Patient-targeted direct incentives known as Pay-for-Patient-Performance (P4PP) have shown great potential in recent years to effect changes in the personal behaviors that are a major cause of poor health outcomes and high healthcare costs.

Yes, there are justifiable reasons and concerns that can be marshaled against P4PP and the seeming simplicity of the approach, from incomplete understanding of many diseases such as obesity (which the AMA now classifies as a disease), compromising of community-based risk pooling, the necessity of protecting vulnerable populations, challenges of getting clinicians on board, political objections to direct payments to patients, and more. However, the call is to continue moving ahead with P4PP with both small community-based pilots and large-scale health system implementations.

If ever there was a practical use of Healthcare IT in support of demonstrating efficacy relatively quickly in an innovation with a chance to succeed, P4PP is it. Healthcare IT can make it a mission to help aggregate the big and small data on these programs and accelerate evaluation and adoption of what works. It can contribute value in helping establish proven effectiveness and limitations of the existing evidence, reasons for under-use of these approaches, and options for achieving wider use, given current law and healthcare payment and provider systems.

We advocate systematic support from the Healthcare IT community to help determine how P4PP along with P4P can best be used to improve the health of individuals while decreasing the overall cost of healthcare.

We can do our part with our proven interface engine innovations. If your organization needs to work with a lot of healthcare data and disparate systems, PilotFish solutions can help you aggregate and transform data from whatever format the sending system provides the data into whatever format the receiving system may require. Please call us at 813 864 8662 to learn more about our data transformation solutions and what they can do for you.

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Monika Vainius

Written by: Monika Vainius

Executive Vice President of Applied PilotFish Healthcare Integration. Monika has extensive experience with systems interoperability. She combines this experience with her professional passion for healthcare and healthcare technology to comment on current healthcare and IT news. Website

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