Paying for Quality and Doing It Right

IntroductionScholars have amply documented the poor quality of American health care.1 There are two aspects to this lack of quality: Substandard care is tolerated and acceptable care fails to live up to its potential.2 The poor state of quality overall is mirrored in the care provided to Medicare beneficiaries. The same physicians, hospitals and other providers who serve the public generally also serve Medicare beneficiaries.3 Many scholars have engaged in a longstanding debate over whether quality should be improved by removing the bad apples from health care or by improving typical practice and thereby raising the mean or median of care.4 Improving care, however, should involve both eliminating substandard care and improving typical practice.5 Strategic reasons may exist to either "protect the floor" or "raise the ceiling" on quality in any particular initiative or activity, but stewards of the Medicare program should be committed to both efforts.Developing a Medicare policy that protects and promotes quality would be easy if quality were a dichotomous variable, with each particular provider either supplying acceptable or subpar health care. But most quality exists on a continuum, and falls along a bell-shaped curve. Thus, the toughest challenge is to determine which part of the curve represents substandard or unacceptable quality.6 Most quality is "acceptable" by public program standards even if there is plenty of room for improvement.Complicating things further, any particular provider's quality is highly variable by condition. For example, the hospital that is best at treating diabetics with severe eye complications may be only mediocre at managing diabetics with serious vascular problems.7 In addition, a never ending string of wellpublicized, horrendous system errors leading to death at the "best" placesDana Farber, Mount Sinai, Sloan Kettering, and, most recently, Duke University-reminds us that system safety and the concentrated expertise necessary for providing cutting-edge quality certainly may not be congruent.8 However, the focus on purely technical aspects of care, such as whether physicians follow recommended guidelines for diagnosis and treatment, has faced complex operational challenges. Factoring in the patient and consumer perspective complicates matters even more.9 Although for purposes of policy analysis there is a common tendency to separate the issues of "access" from those of "quality," in the world where beneficiaries live, the concepts are merged.10 Thus, closing a hospital for technical quality deficiencies should involve important considerations such as the potential loss of jobs, as well as more patient-centered aspects of quality and availability.This complexity makes one want to throw up one's hands and just continue to rely on or hope that physicians will take responsibility for quality as mandated by their professional ethics. By adopting this attitude, the Centers for Medicare and Medicaid Services (CMS) and its contractors might aspire to pay claims efficiently and provide good service to beneficiaries. CMS might also try to figure out how to manage costs, which again has emerged as a major issue dominating public policy attention."As a social insurance program, Medicare relies upon providers in the private sector to supply health care services. Other developed countries with social insurance systems tend to defer to provider self-governance or corporatism, which often includes the authority to allocate funds among guild members.12 Certainly, the tradition of deferring to professional authority over clinical matters is ingrained in social health insurance programs such as Medicare.This Article will fundamentally challenge the notion that Medicare should maintain a passive attitude toward the state of quality provided to Medicare beneficiaries. First, this Article will explore the reasons why Medicare should be an active promoter of quality, emphasizing that its current payment system and related policies already send strong signals that influence provider behavior and performance. …