UPI – United Press International

WASHINGTON, D.C. — Tucked into the Massachusetts health reform package is a pay-for-performance program of unprecedented breadth and scope, but for the program to be successful, the single paragraph in the law must be turned into a detailed list of measures.

And that won’t be easy.

“The conception of the idea is there, but the devil is going to be in the details,” Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights, told United Press International.

The higher the stakes in a pay-for-performance program — which uses quality measures to determine doctor and hospital income — the greater the tension between providers, who want performance measures that are accurate, and payers who are concerned about cost.

The idea of incorporating aspects of pay-for-performance into Medicaid is not new. More than a dozen states — including Massachusetts — have already adopted
components of pay-for-performance in their programs. Rhode Island, which has had a program since 1996, paid out $1.3 million in bonuses out of its $300 million Medicaid budget last year.

But the $180 million at stake in Massachusetts is much greater, and the scope of the provisions, which includes one to reduce racial healthcare disparities, is potentially much broader.

Pay-for-performance systems can play a needed watchdog role, but also must be carefully crafted to avoid giving healthcare providers the wrong incentives, Flanagan said. “When the government provides a stream of money, you should also have a checking system to ensure that it’s used efficiently and in the patients’ best interest.”

The two advisory boards that will be charged with hammering out the details of the plans will include representatives of doctors, hospitals, labor unions, consumers and industry, and they must craft a plan by the next fiscal year when the first of two $90 billion Medicaid reimbursement increases tied to performance take place.

But they will likely come across a debate that springs to life wherever pay-for-performance is discussed.

Healthcare providers say they would prefer that performance be measured based on clinical records that give detailed information about patients’ conditions and treatment. However, that information would be very expensive to compile. Payers, on the other hand, want to use data from insurance claims that list only basic information about diagnosis and treatment.

Massachusetts hospitals welcome the increase in Medicaid reimbursement, and the opportunity for improvement provided by pay-for-performance, Massachusetts Hospital Association spokesman Paul Wingle told UPI, but he added that the measures should be based on the treatment information included in charts and not data on outcomes collected after the fact.

“There are many standards out there for reporting on quality and performance in healthcare,” he said. “We find the best measures are based on clinical records.”

Using the records would also help the program achieve its goal of narrowing racial disparities, he said. “With admissions records you could look back and see how care plans are followed for minority patients compared to the general population.”

The data that already exist are focused on preventive and primary care and has little to say about physician specialties, said R. Adams Dudley, a professor of medicine and health policy and the University of California, San Francisco, who helped develop the pay-for-performance measures that are now used to gauge the quality of care for 80 percent of California’s hospital patients.

Getting better data, however, can cost hundreds of thousands of dollars per hospital and leads to sometimes heated discussions about what the new variables should be.

“There are many variables you would want to have for any one measure,” Dudley said. “Where people go from singing Kumbayah to wrestling in the mud is when you’re talking about what is a valid measurement and who should pay for it.”

But the data are important, he said. Faulty performance measures could be a danger to patients by steering them to poor-quality providers and giving providers an incentive to reject high-risk patients with difficult conditions.

There is also a potential to harm doctors by publishing quality ratings that are inaccurate, Dudley said.

The potential benefits outweigh these risks, he said. “All of this is balanced with an enormous amount of evidence showing problems with quality of care and waste that are rife throughout the system. The risks of pay-for-performance are worth taking to improve the quality of care.”