CMS recently released year-end results from its "groundbreaking" CMS – Premier Hospital Quality Improvement Demonstration.

Participants in the Premier Hospital Quality Improvement Demonstration reported significant improvement in quality of care across five clinical focus areas measured by more than 30 nationally standardized and widely accepted quality indicators.

The average improvement in the project’s second year was 6.7 percentage points, for total gains of 11.8 percentage points over the project’s first two years.

There’s more detail in the rest of the press release and on the Premier website.

CMS and others seem to be going ga-ga over the results, but the question needs to be asked:  Are value-based P4P initiatives really going to lead to improved health care quality across the board?  In the zero-sum game of health care financing (and it might have to be less than zero — see earlier post on this topic), if the top two deciles in the HQID got some extra bucks, then lower-performing deciles and other provider types missed out on $8 million of CMS funding.  Does this incentivize the low performers?  Maybe.  Is enough money at stake in the aggregate to harm the low performers and drive their performance even lower?  Not yet.  Are the health care quality gains, including those occasioned by preventive care, significant enough to warrant these P4P payments?  Probably.  What happens when all deciles bunch up at the top?  That’s a good thing, that’s what we want to incentivize, but then the distinctions between deciles are what law professors like to call "a distinction without a difference." 

Value-driven choices include HSAs as well.  A tip of the hat to Jane Hiebert-White over at the Health Affairs Blog for posting on this issue.  She wrote yesterday:

Gaining greater clarity in exposing costs and value of health care treatments is at the heart of a new approach [2 week free access] published yesterday in Health Affairs by Harvard professor Michael Chernew and Allison Rosen and Mark Fendrick of the University of Michigan. The aim of this “value-based insurance design” is to “help patients spend their health dollar wisely.”

Another voice in favor of promoting HSA flexibility is David Gratzer of the Manhattan Institute, whose Wall Street Journal piece this week bemoaned their underutilization.

In theory, I do not doubt that HSAs can help some well-informed individual consumers save health care dollars.  I also do not doubt that, in theory, value-based insurance design may have some benefits.  However, I think we have a long row to hoe before these experiments could pay off for the population at large (in terms of both cost savings and health status improvement). 

Value-based insurance design means, largely, tiered financial obligations for consumers based on insurers’ decisions about safety and/or efficacy of particular treatments or providers.  Well, tiered provider panels — on the agenda again in the Massachusetts universal health care law; see my summary here) have never gotten off the ground in my neck of the woods (everyone wants to go to the Harvard teaching hospitals, sometimes even for the proverbial hangnail).  And moving consumers to act in their enlightened self-interest may require bigger out-of-pocket expenditures than many folks are willing to stomach (triggering a failure to access preventive health care services and thus leading to higher total costs), and a significant departure from the cost-is-no-object mindset that has pervaded the consumption of health care services.  (See this week’s Washington Post op-ed piece on this subject, also cited by Jane in the same Health Affairs Blog post.)

David Harlow