If Paying for Quality Is Such a Bad Idea, WhyIs Everyone for It?

I. IntroductionIn the recurring ebb and flow of health policy panaceas, the notion of rewarding health care providers-especially hospitals, physicians, or groups of physicians-with additional payments or bonuses for the attainment of high-quality services has achieved particular prominence in recent years. Such incentive payments were a priority recommendation of the Institute of Medicine (IOM) panel that produced the ground-breaking report, Crossing the Quality Chasm: A New Health System for the 21st Century.1 The Centers for Medicare and Medicaid Services (CMS), which has enthusiastically endorsed the IOM approach, has already begun a demonstration project to pay bonuses to Medicare+Choice plans that meet certain standards in the care of patients with congestive heart failure.2 Additionally, a coalition of private-sector purchasers has recently announced other demonstration projects along similar lines in three cities for care of patients with diabetes and congestive heart failure and for physicians' implementation of "patient care management systems."3 This issue of the Washington and Lee University Law Review contains Dr. Robert Berenson's especially thoughtful article advocating such an approach.4To date, the growing discussion in policy circles about the desirability of providing financial incentives for higher-quality care assumes that the idea is a good one prima facie and has focused almost entirely on the formidable technical obstacles to implementing such mechanisms in a way that is reliable, reproducible, and at least facially fair.5 Most of the arguments by those opposed to or uneasy about such incentive programs, such as organizations of hospitals or physicians, have focused on these technical obstacles, without questioning the underlying premises.6 The technical problems are indeed significant and may in fact be of such magnitude as to eventually limit the applicability of such incentives to a relatively small fraction of providers caring for a relatively small fraction of patients. But, this Article will not give much attention to those technical issues, which more appropriately should be considered in a journal of medicine or of health services research. Rather, I wish to argue that differential payment for medical services on the basis of the quality of those services (assuming, arguendo, that differences in quality can be appropriately measured), is an intrinsically bad idea. Adopting such methods will reinforce some of the most deleterious trends in the American health system, while diverting energy from-and possibly working against-other methods of demonstrated efficacy to improve quality.In order to make this argument, this Article will first briefly describe the origins of the current infatuation with paying bonuses for quality. Describing the sources of this enthusiasm will help to illuminate some of the larger issues it raises. The Article then describes four conceptual problems in differential payment on the basis of quality, followed by a discussion of five problems with providing financial incentives for higher quality that are at once both practical and ethical. That will lead into a discussion of the more general issue that underlies the entire debate-the conceptual, practical, and ethical complexities of paying appropriately for professional services.II. Origins of the Contemporary Enthusiasm for Paying for QualityAlthough lone voices have often cried out in the wilderness, widespread concern for the quality of care provided in the American medical system is a relatively recent phenomenon. During the last two decades or so, the following forces have converged, along with others, to create what might be called "The Conventional Consensus" about quality of care:* The automation of health insurance functions, especially claims processing and particularly in the Medicare program, created large "administrative" databases which could be used to characterize patterns of care; more recently, the evolution of data processing technology has made such databases significantly more accessible and more manageable for researchers. …