Addressing Issues

Aligning Payment Policies with Quality Improvement

Background

It is estimated that 10-15 percent of preventable mortality in the United States could be avoided by better availability or quality of medical care.1 A much larger proportion of preventable mortality, about 40 percent, could be avoided by preventive interventions to modify behavior patterns.2 It was estimated in 2002 that 30 percent of annual health care costs in the United States -- about $390 billion -- were a direct result of inadequate quality health care.3

Behaviors such as smoking, sedentary lifestyle and unhealthy eating are major contributors to diabetes, heart disease and other chronic illness and have a great impact on the health of the U.S. population that is likely to shape future health policy priorities.2

Ranked the fifth most costly disease, diabetes is an important target for initiatives to reduce health care costs.3 The direct and indirect costs of diabetes are more than $174 billion annually.4 Under diagnosis and inadequate treatment of diabetes results in unnecessary expenditures as well as tens of thousands of cases of premature death, heart attacks, stroke, limb amputations, kidney disease, and blindness.

Current payment methods may not adequately encourage or support the provision of quality care. Fee-for-service payment methods for physicians and hospitals raise concerns about the potential overuse of services, while capitation and per case payment methods raise concerns about potential under use. All payment methods affect health care professional and patient behavior as well as the quality of care delivered yet the concept of linking payment policies with quality health care is relatively new.5

Fixing quality problems within health care requires the redesign of systems and processes as well as changes in the practice of individual clinicians. Members of the health care team (such as the physician, nurse, dietitian, pharmacist, etc) need fair compensation as well as decision-support tools to improve quality.3,5 Employers, other purchasers of health care, and health plans that are intermediaries between purchasers and health care organizations, also play an essential role in promoting system redesign.

Subtopics within this section include

• The need for affordable insurance coverage.
• Perspectives on fixing the problem of inadequate care:
  • Institute of Medicine (IOM) Recommendations 5,6
  • The health care organization and health care professional role
  • Incentives and rewards for improvement
  • The purchaser role
  • The role of business groups

The following terms apply to this section on Aligning Payment Policies with Quality Improvement in diabetes care:

• Health care organization – an organization that provides access to health care and health care professional services
• Health care professional – an individual with expertise in giving health care to individual patients.
• Patient – an individual who has diabetes
• Purchaser – employer groups & businesses that purchase health plans
• Payer – public and private insurers of health care
• Cost of healthcare – the cost incurred by patients/families for treatment of diabetes and diabetes complications. The cost of healthcare is usually lower when diabetes complications are avoided.
• Quality diabetes care – an agreed upon set of benchmarks aimed at decreasing the risk of health complications for individuals with diabetes as well as the whole American population with diabetes. The set of benchmarks should represent a consensus of health care professionals based on the best published evidence at the time.
• Quality measures – benchmarks against which an individual practice can compare its achievements for its population with diabetes.
• Quality improvement – changes in the health care system aimed at helping patients and health care professionals better achieve the current quality diabetes care benchmarks. Note that treatment goals and targets need to be individualized for each patient and may differ from the benchmarks.
• Performance measures – retrospectively assess the level of care delivered across an entire population with diabetes. They are NOT guidelines for care and do not reflect either the minimal or maximal level of care that should be provided to the individual patient with diabetes. The measures are indicators or tools to assess the level of care provided within systems of care to populations of patients with diabetes.
• Pay for performance – (PFP) is broadly defined to include any type of performance-based provider payment arrangements, including those that target performance on cost measures.

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