Healthcare reform, quality improvement, and reducing the cost of care is a worthwhile initiative but, for several reasons, not an easy one to achieve. To give healthcare organizations, providers and workers a clear understanding of the topic, we will discuss the reasons behind and benefits of transitioning to quality-based payment programs, how the changes will affect them and their consumers, and the various methods of achieving the goal.
Why Transition Away From Historical Healthcare Payment Models?
The push for healthcare payment reform is fueled by a desire to improve the quality-of-care patients receive. Historically and still prevalent today, hospitals and physicians are paid based upon the number of services they provide and the number of patients that they see. Despite these facilities and individuals being comprised of truly caring personalities, they are fundamentally incented based upon volume; the more patients they see the more they get paid. That does not always promote quality services, but instead inadvertently promotes services that can be delivered to the highest number of patients in the shortest time.
Please note that this is a generalized statement describing behavior across a large industry and does not indicate that hospitals and physicians are inherently bad and uncaring institutions and people; they are generally quite the opposite.
What is the role of The Department of Health and Human Services (HHS) in Healthcare Quality Improvement?
To encourage quality care reform, in January 2015, the department of Health and Human Services (HHS) identified new goals that would result in payments being made to hospitals and physicians for providing “quality” services, not just number of services. This announcement also invited private payors, insurance companies such as Aetna, BCBS, Cigna, and United, to match or exceed these goals. Updated goals and new regulations continue to increase the urgency for providers and payors to move to patient-centric systems of service, like value-based care.
A logical question at this time may be, “how is quality being defined?”. This is best answered by providing a couple of quality measure examples:
Examples of How Quality-of-Care Is Measured
Following are just two examples of the many statistics that can be measured to gauge the level of quality that healthcare facilities and providers are delivering to patients. To further emphasize the impact and importance of improving care, we also share a cost analysis.
- Reduced hospital readmissions
Measuring the readmission rate for patients being treated for high-cost procedures and conditions such as hip/knee replacement, coronary bypass, heart attack, and pneumonia provides insight into the effectiveness of surgical and discharge procedures and processes. A higher number of patients requiring readmission within 30 days of the procedure is an indicator that the hospital’s clinical procedures and processes probably need to be improved. - Hospital acquired conditions
Measuring the number of patients who contract subsequent conditions during a hospital stay such as sepsis, staph infection, or injury from a fall provides insight into the effectiveness of patient care quality controls. A higher number of patients contracting subsequent conditions is an indicator that quality controls at the facility need to be improved.
How do hospital readmissions impact healthcare expenses?
One might think that higher quality care would equate to higher healthcare costs. However, in many instances, that doesn’t prove to be true. The following readmission statistics detail the staggering cost of hospital readmissions in comparison to the cost of the initial procedures.
All-cause readmissions
The average cost of a readmission for any given cause is $16,300, with a 13.9% percent readmission rate. This is12% higher than the cost of an initial admission for all-causes, which costs $14,500 on average.
Respiratory System Disease
The mean cost per readmission for respiratory system disease is $16,400, with a 17% readmission rate. This is 29% higher than the cost of an initial admission for respiratory system disease, which costs $12,700 on average.
Blood Disease
The average cost for a blood diseases readmission is $16,900, with a 23.8% readmission rate. This is 43% higher than the cost of an initial admission for blood diseases, which costs $11,800 on average.
Mental Health Disorders
The average cost of a mental health disorders readmission is $8,800, with a 16.2% readmission rate. This is 14% higher than the cost of an initial mental health disorders admission, which averages $7,700.
As demonstrated, in most cases, the cost of the readmission is greater than the original admission cost and, minimally, doubles the overall cost of the case. Therefore, logic indicates that getting it right the first time through improved quality does in fact reduce overall costs.
HHS and the Centers for Medicare & Medicaid Services (CMS) are continuing to demand proof of quality with increasingly greater impact to hospital and physician payments. According to HHS, “CMS will begin to provide certain additional payments for physicians and other practitioners delivering primary and longitudinal care starting in 2024.”
