Pay for Performance: Medicare Hurting Diabetics

The idea of paying for high performing health care providers seems like a good idea, but new laws spelled out in the Health Care overhaul could mean that some diabetics on Medicare could find even limited services cut.

According to a press release in, “The planned nationwide implementation of institutional bonuses mandated under federal health care reform threatens to … [cause] hospitals in less-advantaged regions to lose funds to health care facilities in more affluent areas of the country, according to a study published in the academic journal PLoS Medicine.”

Researchers from New York University, Cornell University, and Harvard University say, “Pay-for-performance assumes that providers have adequate economic and human resources to perform, or improve their performance, within a short time frame. Yet the prevailing distribution of resources in the U.S. health care system makes it difficult for some providers to operate effectively as it is. Payment based on performance may worsen inequalities, as hospitals in under-resourced areas lose funds to their better-off counterparts, with the government acting as a sort of ‘reverse Robin Hood.’ ”

In essence what this policy does is potentially penalize rural health care centers because they don’t have the staff or patient volume to fairly compete with larger medical centers. When they can’t match performance the already struggling rural counterpart is penalized as extra Medicare funds are shifted to the high performance medical centers. The end result would appear to be a lack of quality care for rural residents – unless they are willing to travel to larger clinics in more urban areas. Often this is inconvenient and impractical.

The release explains more about how the new system would work, “Offering bonuses to doctors when they reach pre-determined targets, such as for the regularity of blood sugar checks for patients with diabetes, is a practice that has been adopted widely over the past decade by countries with rapidly aging populations and rising health costs, among them the UK, Australia and Taiwan. Pay-for-performance has also been used in the United States, albeit in a piecemeal fashion. Now, however, the U.S. is poised to evaluate hospitals in Medicare’s “Value Based Purchasing” (VBP) program, and, based on results, to reward those that improve, and reduce reimbursements for those that fail to show progress toward performance targets. The first wave of nationwide evaluation under this federally mandated effort, slated to begin in 2012, will focus on hospital performance on process-of-care measures for common conditions such as heart attack and pneumonia. Later, VBP will likely be extended to other metrics such as risk-adjusted patient death rates.”

This report does point out that there is a window of opportunity “to modify and improve upon the current version” of the new mandate before implementation in 2012. The study concludes, “”Holding providers accountable is not an unreasonable approach to quality improvement, but it must be done in a way that attends to the profound inequalities in local circumstances that shape life in the twenty-first century.”

Critics indicate that this plan could lead to health care rationing while others suggest the language should be addressed and will likely be changed. Those who view this as detrimental to Medicare patients in rural or under-served areas find the prospect less than ideal for patients who have come to rely on local care in familiar surroundings.

Health care remains a critical topic to all Americans, but the notion of decreased services for under-performing medical centers could potentially create significant gaps in care for Medicare patients struggling with diabetes.