New Report Challenges Basic Assumptions About Healthcare Payment Reform

Improving the quality and affordability of healthcare in the United States isn’t about finding the right mix of rewards and punishments for patients and clinicians, according to a new report from the Health Care Incentives Improvement Institute, Inc. (HCI3®), in conjunction with the Robert Wood Johnson Foundation (RWJF). It is about finding an approach that allows them to make good decisions on their own about healthcare.

In a report entitled “Improving Incentives to Free Motivation,” the conventional wisdom that healthcare costs will drop and quality will improve if policymakers and payors simply find the right mix of rewards (“carrots”) and punishments (“sticks”) is questioned. Instead, it shows that external incentives designed to change simple behaviors, like improving productivity in rote tasks, do not work for more complex behaviors. In fact, they can actually be harmful when used for complex behaviors, undermining assets like creativity and drive, which are essential to the success of health professionals and workers in other nuanced fields.

Instead, the researchers argue that reform should focus on identifying and eliminating the external incentives that don’t work while also amplifying the powerful internal motivations that doctors and patients have to deliver or seek the best care.

According to the study, most health professionals enter training with the same goal that their patients enter the doctor’s office with: to improve patients’ health. But, as doctors begin to practice and patients begin to pay, they encounter a whole host of conflicting external forces that distort their once shared goal.

These factors include misguided fee-for-service (FFS) payment models, and the lack of well-established guidelines for treating specific conditions for clinicians, and for patients, poor healthcare literacy, socioeconomic factors, and the structure of benefits provided by employers — among many other financial and environmental factors. The report also analyzes cost and quality variability data for over 20 health conditions, identifying those (such as diabetes and coronary heart disease) most ripe for incentive experimentation and reform.

Early next year, HCI3 plans to release a set of Web-based interactive tools that will help both payors and patients identify negative external factors contributing most to their cost and quality variability issues. The tools will draw on comprehensive data that accounts for the ways in which variability can differ on a condition-by-condition basis. Users will end up with a custom plan of action for addressing the unique set of negative forces they face, and tools for measuring the effectiveness of that plan once it has been implemented.

Source: Robert Wood Johnson Foundation (RWJF) , August 2013

Blueprint for Bundled Payments: Strategies for Payors and Providers provides perspectives on payment bundling, including definitions of key elements, advice for payors and providers, what’s ahead in bundled payments for primary care, and examples of the payment model at work in one organization.

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