Health law’s pay policy is skewed, panel finds

By Robert Pear
The New York Times, April 28, 2014

Federal policies to reward high-quality health care are unfairly penalizing doctors and hospitals that treat large numbers of poor people, according to a new report commissioned by the Obama administration that recommends sweeping changes in payment policy.

Medicare and private insurers are increasingly paying health care providers according to their performance as measured by the quality of the care they provide. But, the draft report by an expert panel says, the measures of quality are fundamentally flawed because they do not recognize that it is often harder to achieve success when treating people who do not have much income or education.

Low-income people may be unable to afford needed medications or transportation to doctor’s offices and clinics, the panel said. If they have low levels of formal education or literacy, they may have difficulty understanding or following written instructions for home care and the use of medications. In addition, the clinics and hospitals they use may lack the resources and high tech equipment needed to diagnose and treat illnesses.

The panel found that existing payment policies unintentionally worsen disparities between rich and poor by shifting money away from doctors and hospitals that care for “disadvantaged patients.”

Measures of health care quality and performance — widely used by Medicare and private insurers in calculating financial rewards and penalties — should be adjusted for various “sociodemographic factors,” the expert panel said. The panel was created by the National Quality Forum, an influential nonprofit, nonpartisan organization that endorses health care standards.

….The Obama administration commissioned the study, but is not entirely comfortable with the recommendations, officials acknowledged. The existing policies of the National Quality Forum and the government say performance scores should generally not be adjusted or corrected to reflect differences in the income, race or socioeconomic status of patients.

…. “We do not want to hold hospitals to different standards of care simply because they treat a large number of low-socioeconomic-status patients,” said Dr. Kate Goodrich, the director of quality measurement programs at the federal Centers for Medicare and Medicaid Services. “Our position has always been not to risk-adjust for socioeconomic status within our measures because of concern about masking disparities, and potentially rewarding providers who provide a lower level of care for minorities or poor patients.”…

The notion that doctors and hospitals are screwing up and will behave if they are subjected to punishment and reward by third parties is not new. The Code of Hammurabi (1750 BC) subjected Mesopotamian doctors to a combination of reward (more shekels) and punishment (cutting off of doctors’ hands)  But even Hammurabi didn’t recommend punishing the patients.

But that is effectively the position taken by the National Quality Forum (NQF), the Obama administration, and the numerous private-sector firms and groups that peddle pay-for-performance (P4P) as a solution to the health care crisis. By refusing to adjust scores on report cards to reflect patient socioeconomic status (SES), P4P proponents are guaranteeing that the P4P fad will punish clinics and hospitals that serve poorer patients.

It is widely known that report cards on clinics and hospitals that are used in P4P schemes are, with rare exceptions, poorly adjusted to reflect differences in patient health. It is also widely known that report cards are almost never adjusted for income, insurance status and other SES indicators. But what was not widely known until Monday’s report in the New York Times was that the NQF and the Obama administration have actually endorsed a policy of prohibiting the use of SES data to adjust scores on report cards.

Why would the NQF go to the trouble of explicitly outlawing the use of SES adjusters and thus draw attention to a serious defect in virtually all P4P schemes in use in America today?

As is always the case with managed care propositions, finding a well-documented argument for the NQF’s position is impossible. All we have is this tiny remark in footnote 15 in an NQF document:

“Risk models should not obscure disparities in care for populations by including factors that are associated with differences/inequalities in care, such as race, socioeconomic status, or gender (e.g., poorer treatment outcomes of African American men with prostate cancer or inequalities in treatment for CVD risk factors between men and women).”

Like most report-card proponents, the NQF gives at least lip service to the necessity of adjusting scores to reflect differences in patient health because (a) these differences affect quality measures and (b) they are beyond provider control. Why, then, wouldn’t the NQF treat SES factors the same way? Patients’ low income, their lack of health insurance, their illiteracy and other factors subsumed under the concept of low SES status affect the outcome of medical care, and they are all way beyond the control of providers.

The basic premise of the NQF and the Obama administration is that the only way for policy makers to know if medical care has worse outcomes in poor people is via report cards. This premise is so foolish its mere statement constitutes a rebuttal.

The NQF “argument” then goes on to claim that the benefits of revealing disparities in health care outcomes via report cards outweighs the damage done to providers who treat poor people and to poor people themselves. Or at least that’s what we have to imagine went through the minds of the folks at NQF. As I said, the proponents of this bizarre policy apparently did not feel compelled to leave a paper trail that would help the rest of us comprehend their thinking.

It was the existence of this strange policy that led to the convening of the expert panel described in the Times article. panel rejected the NQF-administration rationale by huge margins. According to the panel’s report:

“There is a clear and expanding body of evidence to suggest that providers serving ‘low-socio-demographic’ populations and communities are more likely to be identified as ‘poor performers’ and either be less likely to receive financial rewards, or be more likely to face financial penalties, in pay-for-performance programs.”

“The net effect,” said the panel, “could worsen rather than ameliorate healthcare disparities.”  To avoid this outcome, said the panel, the NQF should “reconsider” its policy. If the NQF remains concerned that lawmakers may remain in the dark about disparities in health outcomes, it should seek evidence for such disparities through other, more traditional means. In the future, the panel concluded, “purchasers, policymakers and other users of performance measures should assess the potential impact on disadvantaged patient populations …. (p. 10)” before imposing P4P schemes.

How did it come to this? Why do our country’s top health policy makers have to be told to honor the fundamental principles of science and medicine, namely, make sure whatever you recommend is safe and effective before administering it?

There are some big obstacles to achieving universal coverage in the US under a single-payer system. None is more serious than the sloppiness of managed care think – the refusal of the health policy elite to honor the equivalent of evidence-based medicine and the equivalent of the Hippocratic Oath. It encourages lawmakers to buy cheap, snake oil health policy in place of real medicine. All of us who care about an efficient and humane health care system in the US must redouble our efforts to shine a light on the establishment’s cavalier attitude toward science and ethics in health policy.