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2009: The Year that Redefined How We Provide Quality Healthcare

Janice Simmons, for HealthLeaders Media, December 31, 2009

Quality healthcare is hopefully a goal that all providers and healthcare organizations strive for daily. The results sought are many—good medical outcomes, satisfied patients, improved patient well-being. The list goes on. But one major area that has come under debate is how we can make sure quality care is delivered at affordable levels. This past year brought to the forefront new ways we can provide—and yes, even pay for—quality healthcare.

Some of these areas are still under discussion at the federal level as part of the healthcare reform debate. Others involve bringing ideas that worked at the local level to a broader national audience. But some ideas emerged in 2009 that may encourage innovation and change the way we approach quality healthcare in the future. Here are several to consider:

Accountable care organizations. At the April meeting of the Medicare Payment Advisory Commission (MedPAC) in Washington, DC, two staffers presented tentative definitions of "accountable care organizations" or ACOs. They noted that ACOs could be made up of a variety of hospitals, primary care specialists, or medical specialists who could work together to promote improved care coordination and collaboration with providers in the Medicare program.

The goals of these organizations would be to reduce unnecessary services by controlling volume and to improve quality. In turn, provider payments or bonuses would be tied to quality and the resources used. Quality benchmarks could be established, for instance, by using objectives such as lowered mortality rates or reduced hospital readmissions.

These recommendations eventually were included in MedPAC's report to Congress in June. The current House and Senate healthcare reform bills calls for pilot programs to test the use of ACOs in providing and paying for care.

One example emerged in a three-county area around Sacramento, CA, earlier in the year. In an initiative led by Blue Shield of California, Hill Physicians Medical Group, and several Catholic Healthcare West hospitals, a "virtual integrated model" will begin providing services to California Public Employees' Retirement System (CalPERS) members on Jan. 1.

The goal will be to provide optimum care while taking unnecessary costs out of the healthcare system—using shared savings as an incentive: The three provider organizations have an agreement with CalPERS to keep healthcare costs for the pilot program at or below the 2009 levels in the Sacramento area. If they deliver care in 2010 at rates less than the 2009 levels, they will keep that savings; if costs emerge above 2009 levels, they will pay the difference.

Value-based purchasing. During the reform debate, President Obama cited several healthcare organizations that consistently provided affordable, quality healthcare to their patients. One of those organizations, the Mayo Clinic, noted that while it "wholeheartedly supported" the president's call for reform, it did not embrace the "flawed" government-set payment methodologies that were being used to pay physicians and hospitals.

Instead, Mayo and several other healthcare organizations called for a value index that would define, measure, and pay for value while holding down costs. Capitol Hill, it turned out, was listening.

In the House healthcare reform bill approved in November, provisions were added that would change the way Medicare pays hospitals and physicians by moving from a formula that pays for the volume of tests and procedures performed to a value-based formula that emphasizes quality care and cost-effectiveness. The agreement calls for two studies to be carried out by the Institute of Medicine to address geographic variations in payment and how to reset Medicare payments to providers.

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