Investment in New Health Care Quality Measures Needed as Cost-Cutting Strategies Grow

For Release

February 22, 2011

As the health care industry, employers and government officials seek to control the growth of health spending, new efforts are needed to develop and refine quality-of-care and other performance measures that can assure changes will improve medical care and do not harm patients, according to a new RAND Corporation study.

While some current quality measurement tools may be useful to new performance-based payment models, significant work is needed to design and test methods which can be applied to measuring the quality of care provided under innovative payment reforms, according to the report.

"Insurers and purchasers of health care in the United States are on the verge of potentially revolutionary changes in the approaches used to pay for health care," said Dr. Eric Schneider, the study's lead author and a senior natural scientist at RAND, a nonprofit research organization. "A significant investment is needed to develop new performance measures that can assure high quality care as the United States experiments with these new payment models."

The RAND report, sponsored by the National Quality Forum, studied 90 payment reform programs and identified 11 general payment reform models that reward providers for delivering better-quality, cost-conscious care or pay health care providers a fixed amount to coordinate treatment of an illness such as diabetes.

Researchers say the 11 payment models vary widely in how they alter current payment methods, the patients and services affected, and the number of clinical providers that might be subject to the new payment arrangements.

To date, payment reform models have focused on hospitals, outpatient medical practices and physicians, but future performance-based payment reform will also include other types of providers such as long-term care settings and surgery centers.

The researchers identified five priority areas for further development and refinement of health care quality measures that could be applicable to many of the 11 payment reform models:

  • Health outcome measures that can be used to assess the health status of populations, including patients' quality of life and safety outcomes, such as avoiding harms that can be caused by health care.
  • Quality measures that can be used to examine the way care is coordinated among health providers, such as when a patient is transitioned from a hospital to outpatient care or a nursing home.
  • Programs that can be used to assess the participation of patients and their caregivers in their medical care.
  • Measures that can be used to assess the structure of health systems, particularly those built to respond to the new payment models. Items to be assessed should include the quality of care management and the use and functionality of electronic health records.

Researchers also say that effort is necessary to assure that payment reforms do not increase disparities in health care. Measures for this purpose would monitor access to care and detect whether providers are turning away high-risk or medically-complicated patients.

Since at least the 1980s, the traditional fee-for-service model of health care payment has been challenged by reforms that alter payment methods in order to limit costs. Critics say that the persistent use of fee-for-service—where health providers are rewarded only when they provide more care—encourages unnecessary health care spending without enhancing quality or efficiency.

The Patient Protection and Affordable Care Act of 2010 has given new impetus to payment reforms that can achieve both cost containment and improvements in health care quality. Most of the new approaches are expected to tame costs by reversing incentives to deliver more care. Instead they create incentives to providers and patients to weigh the costs of their medical choices. But some worry that if providers are at financial risk, these payment models may have mixed consequences for quality. Quality measurement should be used to assure that the financial incentives produce high quality cost-conscious care.

The study, "Payment Reform: Analysis of Models and Performance Measurement Implications," is available at Other authors of the study are Peter S. Hussey and Christopher Schnyer.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on quality, costs and health services delivery, among other topics.

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