Could Medicare Quality Payment Plans Create Inequality?

Janice Simmons, July 1, 2010

In the healthcare reform debate, hospital pay-for-performance has received plenty of discussion—how it could impact health outcomes, how it could promote efficiency, how it could change care coordination. But a nagging question remains: could use of pay for performance end up taking funding away from hospitals across the country providing care in poor, underserved areas?

Beginning in 2013, the first step of pay-for-performance implementation starts—when hospitals will have some revenues withheld by Medicare and then returned if they meet specific clinical targets.

However, pay-for-performance assumes that hospitals will all have the same economic and human resources that they need to perform or to improve their performance, says Jan Blustein, MD, PhD, a New York University professor of health policy and medicine, and two of her colleagues in a new Public Library of Science (PLoS) journal study.

In a way, there are similarities between implementing pay-for-performance in hospitals and implementing the “No Child Left Behind“ initiative several years ago for education, Blustein says in an interview. “I think it’s very challenging,” she says. “One of the problems is we know very little about what helps and what works.”

In education, schools are told to do better—“but there is no science there. We really don’t know what works in the school,” she says. While there is some evidence that teachers matter, “there’s not a lot of evidence to support that.”

“And the same thing is true in healthcare. We know a lot about what works to improve a patient’s health, but we really don’t know about what works to improve organizational performance.” Some may use consultants heavily, or others may work with groups of hospitals. “Perhaps that’s a good thing to do. But I think that we really don’t know.”

But, if the resources aren’t there for the hospital to make improvements, would those hospitals end up losing money in the long run based on performance? In other words, they ask, could the government be rewarding well-funded hospitals at the expense of poorer hospitals that provide critical services to support the need of the underserved?

Janice Simmons Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at
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