New Study Highlights The Importance Of Incentives In Improving Health Care Quality

3/21/2002

From: Robin Strongin, 202-408-6889 Kari Root, 202-292-6778 both of the Academy for Health Services Research and Health Policy

WASHINGTON, March 21 -- Providing incentives for those on the front line of health delivery is key to improving quality. That is the conclusion of a new report and the focus of a major new initiative.

The report, titled Provider Incentive Models for Improving Quality of Care was issued today by the National Health Care Purchasing Institute (NHCPI), part of the Academy for Health Services Research and Health Policy. The study highlights 11 incentive models aimed at improving health care quality, all of which can be used to motivate physicians or hospitals.

Financial Incentives -- Quality Bonuses -- Compensation at Risk -- Performance Fee Schedules -- Quality Grants -- Reimbursement for Care Planning -- Variable Cost Sharing for Patients

Non-financial Incentives -- Performance Profiling -- Publicizing Performance -- Technical Assistance for Quality Improvement -- Practice Sanctions -- Reducing Administrative Requirements

These and other incentive systems will be studied more closely in a new, innovative $8.8 million initiative of The Robert Wood Johnson Foundation (RWJF) and the California HealthCare Foundation (CHFC). Called "Rewarding Results," the initiative is designed to help employers, health plans, and state Medicaid agencies develop and implement incentives to reward physicians and hospitals for higher quality. Rewarding Results will be administered by the NHCPI.

"Numerous studies show that poor health care quality is a leading cause of death and injury in the United States, increases annual health care costs by $420 billion, and may cost employers another $300 billion a year in lost productivity," says Kevin B. Piper, NHCPI director. "Incentives provide both the motivation and the resources for physicians and hospitals to improve care."

Rewarding Results will provide grants of up to $1 million each over three years to help organizations demonstrate that well-designed financial and non-financial incentives can improve quality of health care. Employers, health plans, and Medicaid agencies are among those eligible to apply for grants. Rewarding Results will also offer technical assistance to grantees and other purchasers and health plans interested in implementing incentives. The Agency for Healthcare Research and Quality and The Robert Wood Johnson Foundation are co-funding an evaluation of the program's impact and effectiveness.

"The health system does not consistently do what the best medical science tells us should be done for people -- especially those with chronic conditions, who get the right care only about half the time," says Dr. Steven A. Schroeder, President of the Robert Wood Johnson Foundation. "This new initiative will help address the chasm between what health care is and what it ought to be."

A key objective of Rewarding Results is to align incentives with high-quality health care, consistent with recommendations of a recent Institute of Medicine report, entitled Crossing the Quality Chasm. "The Institute of Medicine report makes the case for improving quality in care more clearly, more compellingly than ever before," notes CHCF's president and CEO, Mark D. Smith, M.D., M.B.A. "Participation in Rewarding Results, furthers the California HealthCare Foundation's effort to make health care delivery and financing systems work better for more people."

For more information on Rewarding Results, the Call For Proposals, or to obtain copies of the NHCPI report, contact Sarah Callahan, deputy director, Rewarding Results at callahan@ahsrhp.org or visit http://www.nhcpi.net/.

------ The National Health Care Purchasing Institute (www.nhcpi.net) was founded to improve health care quality by advancing the purchasing practices of major corporations and governmental agencies, particularly Fortune 500 companies, Medicare, and public employers. The Robert Wood Johnson Foundation (www.rwjf.org) sponsors the Institute through a grant to the Academy for Health Services Research and Health Policy (www.academyhealth.org).

The Robert Wood Johnson Foundation (www.rwjf.org) based in Princeton, New Jersey, is the nation's largest philanthropy devoted exclusively to health and health care. It concentrates its grantmaking in three goal areas: to assure that all Americans have access to basic health care at reasonable cost; to improve care and support for people with chronic health conditions; and to reduce the personal, social, and economic harm caused by substance abuse -- tobacco, alcohol, and illicit drugs.

The California HealthCare Foundation (www.chcf.org), based in Oakland, California, is an independent philanthropy committed to improving California's health care delivery and financing systems. Formed in 1996, its goal is to ensure that all Californians have access to affordable, quality health care. Its work focuses on informing health policy decisions, advancing efficient business practices, improving the quality and efficiency of care delivery, and promoting informed health care and coverage decisions.

The Agency for Healthcare Research and Quality (AHRQ) (www.ahrq.gov) develops and disseminates research-based information to increase the scientific knowledge needed to enhance consumer and clinical decision-making, improve health care quality, and promote efficiency in the organization of public and private systems of health care delivery. AHRQ helps the nation's health care system provide high-quality, cost-effective services; be accountable and responsive to consumers and purchasers; and improve Americans' health status and quality of life. AHRQ is the health services research arm of the Public Health Service, a component of the U.S. Department of Health and Human Services.