Little Pay for No Performance

If you’ve been following some of my previous posts on the insanity of the U.S. health care system, such as the Maze series, you will recall the looming ogre in payment “reform” called pay for performance. Medicare, and the me-too sycophants in the insurance industry, have been promoting and implementing a payment system which nominally will pay more for care which meets certain quality standards. This concept is based on a host of unproven assumptions — the most egregious of which are the unspoken assumptions that much care delivered is substandard, and that trivial increases in reimbursement will correct shortcomings in quality (which are vastly more likely to be due to system complexity than individual error or incompetence). Nevertheless, this lumbering freight train is rumbling down the rails toward our health heroine Nell, lashed to the tracks by Snidely Whiplash, your dastardly federal and private insurance bureaucrat.

Today’s Wall Street Journal (subscription required) reports on a JAMA study of just how well this system works. In a pilot project funded by Medicare, the stunning results are in: it doesn’t. Color me shocked:

Researchers at Duke University, examining heart-attack treatment at 500 hospitals, found that hospitals that received financial incentives to follow treatment guidelines didn’t improve their practices significantly more than hospitals that got no financial benefit.

The federal Centers for Medicare and Medicaid Services launched the pay-for-performance pilot in 2003. Participating hospitals provided the CMS with performance information for five conditions, including heart attack. Hospitals in the two highest performance levels for a condition received a bonus.

In the Duke study, published in this week’s Journal of the American Medical Association, 54 of the hospitals were participants in the CMS pilot and received the financial incentives. The other 446 “control” hospitals didn’t get such payments.

The findings showed that “the pay-for-performance program was not associated with a significant incremental improvement in quality of care or outcomes for acute myocardial infarction,” or heart attack, Duke cardiologist Eric D. Peterson and colleagues wrote in the journal article.

Of course, the usual special pleading is immediately evident: perhaps the carrots weren’t juicy enough (like that will ever happen, in a system which is economically hemorrhaging), or the sticks weren’t nasty enough (now you’re talkin’! Keep beating that dead horse, and surely it will run faster):

It’s possible the financial penalties for not complying weren’t sufficient. “Those with the poorest performance risked future financial penalty,” researchers said, but didn’t actually pay such a penalty. Bonuses for complying with performance standards totaled $17.6 million to a total of 123 hospitals in the first year and 115 hospitals in the second year.

“One read on this is that the carrots have to be bigger,” Duke’s Dr. Peterson said. Hospital officials involved in the Medicare pilot project said this winter in a conference call with reporters that financial incentives were small relative to their budgets.

Now that the data is in, you can be sure that our bureaucrats will rethink their foolish ways — or not:

Still, the findings raise the question of what the Medicare system will do next. A Medicare spokesman said the agency hadn’t seen the study and so couldn’t comment on it.

Nice. Medicare, who funded the study, hasn’t seen the results. Never let the facts get in the way of a bureaucrat on a mission — it just confuses them.