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Therefore, fewer patients are identified as extraordinary if the assumption of normality is made, and
there will be a group of patients who require costly treatment, but for whom providers will only receive
standard reimbursement. Approximately 5% are identified as outliers when the proportion of outliers is
more in the neighborhood of 10-15%.
Background
report cards to Influence Providers
Insurers have considerable leverage to influence providers to change policies and to comply with guide-
lines and benchmarks.(Hollingsworth, Krein, Miller, DeMonner, & Hollenbeck, 2007) Reimbursements
are now often linked to the quality of care. This is known as value-based purchasing, or pay for perfor-
mance, often abbreviated as P4P. Such models assume, for example, that better care will reduce surgical
complications, length of stay, and readmission rates.(Lewis & Friesen, 2006) Currently, the Centers
for Medicare and Medicaid have established a voluntary system for physicians to report 16 measures
of quality outcomes. Hospitals report on 10 measures. Although voluntary, hospitals not reporting can
suffer a financial penalty, which tends to make it mandatory. In other words, reporting is “voluntary” in
the same way that federal income tax is defined as “voluntary”.
In the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Congress directed
the Institute of Medicine to identify options for pay-for-performance to be implemented through Medicare
reimbursement.(Anonymous-Medicare, 2003) Other insurers are expected to follow. However, instead
of penalizing providers for poor performance, the approach has been to reward high performance with
bonuses. (Bhattacharyya, Priyesh, & Freiberg, 2008; Hazelwood & Cook, 2008) The impact is the same.
Higher ranked providers get more money.
Unfortunately, physicians are now being taught how to “game” the system to optimize their ranking
while not actually improving patient care. In this respect, scarce resources are devoted to documenta-
tion to maximize reimbursement rather than to provide actual improvements in healthcare.(Bodrock &
Mion, 2008) In addition, it is possible that resources will be focused on the patient conditions that are
included in the reporting, neglecting other patient conditions that are not.
Consider, for example, some advice provided to physicians (Hayward & Kent, 2008) specifically
on how to “game” the system, including providing incorrect blood pressure readings for hard to treat
patients. It also suggests that adults can always be diagnosed with something, and these diagnoses can
be used to increase reimbursements.
All too often clinicians are stingy in diagnosing patients with disease. These physicians carelessly mis-
label many patients as “healthy,” overlooking more subtle signs of disease, giving patients a false and
dangerous sense of security. In the era of P4P, this is virtually malpractice. Fortunately, experts are
beginning to recognize what simple common sense tells us: people are either diseased or prediseased,
since good health is always temporary. Thankfully, it's now quite difficult for an adult patient to avoid
having at least one of the following diseases: diabetes/prediabetes, hypertension/prehypertension, obesity/
overweight/flabby thighs, or a detectable LDL level…. This one little activity can (1) lower costs per
diseased patient (since your “diagnosed” cases are now less sick on average), (2) make your patients
appear more ill (since they will now have more comorbid conditions), while (3) improving your quality
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