Health care-related errors harm millions of American patients each year and needlessly add billions of dollars to health care costs. The Centers for Disease Control and Prevention (CDC) estimated that at least 1.7 million healthcare-associated infections occur each year and lead to 99,000 deaths. Adverse medication events cause more than 770,000 injuries and deaths each year—and the cost of treating patients who are harmed by these events is estimated to be as high as $5 billion annually. Pay-For-value is the most significant form of P4P in our today’s healthcare. Pay-For-values approach put together the low cost and quality outcomes. For example, a pay for value program may reward providers for improving quality, while keeping or reducing costs constant.
Based on a research report from leapfroggroup.org, the study discovered specific goals and rationale of using Pay-For-Performance. This rationale is based using 3 groups to describe the approach, namely, purchaser or employer groups, health plans, and healthcare providers. The employer motivation for P4P was based on large employer alliances structuring their business case for high quality paying. With the increasing hospital and pharmaceutical costs, new technologies, increased employment and government regulations stretching healthcare affordability to its limits, purchasers are demanding benefit programs that offer better value for their premium dollar. By rewarding improvements in the care process, these coalitions believed they can save money by keeping patients healthier while reducing avoidable hospital admissions.
Based on the same research at leapfroggroup.org, “the healthcare system in the United States is at crossroads. Resurgent medical cost-inflation, combined with increasing utilization by an aging and newly empowered consumer population, has put considerable strain on both healthcare delivery and finance. These cost issues are compounded by a growing chorus among industry experts and consumers alike–calling for improvements in the quality of care. Numerous attempts at containing costs and improving quality have previously been attempted, but with little success. Health initiatives based on quality have not worked to contain the growth of healthcare expenditures. Likewise, purely utilization-driven programs, such as generalized pre-authorization, have proven burdensome and financially ineffective. P4P programs, in contrast, hold promise for effectively addressing these dual concerns – perhaps precisely because P4P addresses both issues as part of a holistic approach to providing care. Value-Based Purchasing gives buyers like employers the power to hold providers of any costs and quality of care. Additionally, value-based purchasing brings together information on the quality of health care, including patient outcomes and health status, with data on the dollar outlays going towards health. It also relies on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers. This strategy can be contrasted with more limited efforts to negotiate price discounts, which reduce costs but do little to ensure that care quality is improved.
Opting in for a P4V system is good. However, two studies released recently paint starkly different pictures regarding the ability of the nation’s health care system to reduce costs by coordinating care and paying health care providers, based on quality and efficiency. The studies (found at http://www.cbo.gov/publication/42860) are interesting because the federal health reform law pretty much puts all its cost-containment ideas in one hand, hoping to demonstrate that changing the way we pay for health care can drive large-scale savings and, in turn, hold down the cost of health insurance.
References:-
Retrieved September 5, 2012 from http://www.leapfroggroup.org/media/file/Leapfrog-Pay_for_Performance_Briefing.pdf
Retrieved September 5, 2012 from http://www.rti.org/pubs/bk-0002-1103-mitchell.pdf
Retrieved September 5, 2012 from http://www.cdc.gov/HAI/pdfs/hai/infections_deaths.pdf
