P4P PASSES. In politics, the battle lines over health care are drawn atop access. The quality of our care is granted, the only question is how more folk can reap the benefits. In academia, however, the question is as often care. Our surgeons may be on the cutting edge (thanks folks, I'll be here all week), but stepping back a bit from the frontier, the vast majority of care is either inefficiently delivered or simply forgotten. Studies show that we receive only about 55 percent of the recommended treatments for most serious complaints -- and we're not talking CAT scans here, but easy lifesavers, like aspirin and beta blockers after a heart attack. America offers the world's best care for the most exotic and complicated problems, but if you're unlucky enough to suffer something more mundane, you're better off in a host of other hamlets.

The policy response here is something called pay For Performance medicine, or P4P. At base, the incentives in our system are to offer treatments, particularly intensive ones. It's called fee-for-service, and it offers no incentives for quality care or low intensity (aspirin) treatments. P4P, by contrast, pays based on outcomes, on percentage of suggested care delivered (for a fuller explanation, see this review I wrote). It pays based on how good, not how expensive, the treatment is. And one of its first major tests just ended. Utilizing more than 200 hospitals and 38 states, Medicare instituted P4P systems, paying based on treatment quality and comprehensivity and offering bonuses for outcome improvement. The results? Not only did care get better, but it got cheaper. "2004 hospital costs for pneumonia patients were $10,298 for patients who received a low number of the care measures and $8,412 for those who received a high amount. Hospital costs for heart bypass surgery patients also varied widely, with those receiving a low number of measures costing $41,539 while those who had the highest amount cost $30,061."

The mechanism here is that better care means fewer days in the hospital, fewer relapses, less catastrophic measures deployed. Those things are expensive and, contrary to popular opinion, much lifesaving care is cheap -- at least if you deploy it early. It's worth noting here that it took the influence of Medicare, a single-payer government system, to finally force a wide test of P4P theories. Private insurers are too fractured, and lack the proper incentives, to trigger a reevaluation of hospital care procedures. But Medicare, using their weight and public mission, forced a study that may pave the way towards more efficient, cost-effective, and worthwhile care.

Ooh, scary government, huh?

--Ezra Klein

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