To Buy Right, Pay for Performance Must Get Real About What It Measures

In an earlier piece, I argued that a necessary path through America’s health care cost crisis is to make sure we are buying right —paying for the right care, at the right price, with the right results. If that is the destination, then pay for performance, the principal market mechanism we have built to get there, has to work. It does not. For 25 years, since the Institute of Medicine released the To Err Is Human and Crossing the Quality Chasm , which documented that preventable harm was killing tens of thousands of Americans every year, we leaned on a simple proposition: tie payment to demonstrated performance, and the delivery system would move toward better care at lower cost. Neither promise has been kept. What we have today looks more like pay for reporting than pay for performance. That distinction is where buy right quietly goes to die. Measuring What’s Easy, Not What Matters Most of the metrics we rely on were chosen because they could be captured, not because they reliably distinguish care that helps patients from care that does not. They reward documentation. They confirm that a box was checked, a protocol followed, and a chart abstracted on time. They rarely tell us whether the patient got better. Outcome measures, recovery, function, harm avoided, are significantly harder to calculate. They demand richer clinical data and risk adjustment that holds up at the provider’s level. And they are routinely delayed by claim-based reporting cycles that surface a year or more after the care was delivered. By the time CMS publishes a hospital quality result , the clinicians involved have moved on, the data are stale, and patients looking to choose a provider are flying blind. Consumers, employers paying for coverage, and physicians making referrals are all asked to act on numbers that no longer describe today’s care. Burden Without Insight Layered on top of a weak signal is an enormous burden. CMS has spent more than a billion dollars over the past decade developing measures. One careful estimate puts the cost to physician practices of reporting them at over $15 billion a year and roughly 785 hours per physician annually. A single major academic hospital reported spending more than $5 million in a year to report some 160 separate metrics. Overlapping federal, state, and private requirements compound the cost without insight. To make matters worse, most measures have a useful life of perhaps three to five years before improvement flattens. Yet, metrics embedded in legislation, such as those in the Hospital Readmissions Reduction Program , can only be changed by an act of Congress. We froze yesterday’s questions in place long after the field had wrung whatever it could from them. And programs designed for accountability have, at times, ended up penalizing the safety-net hospitals doing the hardest work, eroding trust in the enterprise. What Buying Right Actually Requires If pay for performance is going to be delivered, its metrics must do three things, not one. They must assess true quality and enable improvement —meaning real clinical outcomes, captured close to real time, risk-adjusted rigorously enough to be credible, and delivered to clinicians while they can still act on them—not a year and a half after the patient has gone home. They must make accountability effective —so that payment, recognition, and consequences track providers who deliver better outcomes, not those best at reporting them. And they must make transparency actionable —for the three audiences who use it differently: consumers choosing where to seek care, employers and purchasers deciding how to spend their health care dollars, and clinicians driving improvement and making referral decisions. None of the three is well served today. The Moment Is Ripe The good news is that technology is finally catching up to the ambition. Interoperability, AI extraction from unstructured clinical notes, near-real-time outcome detection, and patient-reported outcomes can turn measurement from a retrospective compliance exercise into a tool that guides care while the patient is still in front of the clinician. Measurement fatigue is widespread. The limits of process measures are widely acknowledged. We are now on the threshold of what we need to do better. What is needed is a hard-headed rethinking, from the ground up, of what should be measured, at what cadence, with what data infrastructure, and through what changes to law, regulation, and insurance practice. Another round of incremental tinkering will simply not yield the results we need. Without real change, buy right will remain a slogan dying quietly. With it, we have a real shot at making each health care dollar finally do what we have promised for a quarter century: deliver real quality, real accountability, and transparency on which patients, purchasers, and providers can act. The post To Buy Right, Pay for Performance Must Get Real About What It Measures appeared first on American Enterprise Institute - AEI .