Pay for quality in spotlight with new Medicare reimbursement rules

September 1, 2008

There is more focus on linking payment with quality, whether as pay for performance, value-based purchasing or restructured employee benefits packages that modify out-of-pocket expenses based on quality of providers, according to experts.

NATIONAL REPORTS - There is more focus today on linking payment with quality, whether as pay for performance, value-based purchasing or restructured employee benefits packages that modify out-of-pocket expenses based on quality of providers, say experts. This is why CMS's recently updated policy of refusing to reimburse for certain preventable events is top-of-mind for the industry.

"For some time now, the industry has been trying to satisfy two competing demands: employer demands for improved quality and reduced cost, and demands for plans to include a competitive network," says Leah F. Binder, CEO of the Leapfrog Group. "Paying for value allows employers to evaluate provider data and judge the quality of the managed care product on the value of the services list of new conditions."

According to Binder, these are trends Leapfrog has encouraged since its inception in 2000, but she has never before seen this level of implementation. "The flip side of paying for good performance is not paying for poor performance, which is why the CMS list of new conditions is a positive development," she says.

"There are well-established, evidence-based protocols all hospitals should adhere to in preventing these complications," Binder says. "When the evidence is highly compelling about preventing a problem, it is reasonable for CMS to require compliance with preventive measures 100% of the time."

According to some reports, CMS earlier this year had proposed to add seven other conditions to list but didn't because of concerns raised by hospitals.

"CMS is a government agency, and we live in a democracy, so CMS incorporates all stakeholders in its rulemaking," explains Binder. "Certainly hospitals are important institutions in our country and ought to play a role in our nation's health policy. But it also points out why it is so important for employers to monitor trends in health policy, because employers are not as constricted by the demands of stakeholders and can structure payment systems that meet the demands of payers and providers."

Earlier this year, Aetna announced that it would incorporate language from the Leapfrog Group's policy on never-events (a list of occurrences compiled by the National Quality Forum that threaten patient safety and should never happen) in its hospital contract templates, according to Randall Krakauer, MD, Aetna's head of Medicare medical management.

"By working collaboratively with hospitals on these types of initiatives, we can help improve patient care," Dr. Krakauer says. "Sharing information and improving processes will help both insurers and hospitals identify patterns of patient safety risks and understand their causes, so that we both can take actions that help improve the quality of care being delivered and eliminate the wasteful spending associated with such events."

MEDICAID NOT PAYING

CMS recently sent a letter to state Medicaid directors encouraging states to adopt the same non-payment policies outlined in the recent Medicare rule. Nearly 20 states already have or are considering methods to eliminate payment for some never events, according to a CMS release.

According to Binder, the Massachusetts Medicaid program is the most recent program to implement a non-payment policy.

"There is no question this is a trend that is here to stay," she says.