As the harsh realities of financial catastrophe associated with out-of-control health care costs/spending became accepted as inevitable by forward-thinking health care strategists in the late 1980s, several isolated “demonstration projects” appeared on the health care landscape. The rationale behind the development of these projects was that hospital and physician reimbursement could be effectively contained by a system of “bundled” payments . These projects tended to be focused on surgical procedures with one of the most notable early projects started by Dr. Denton Cooley at the Texas Heart Institute in 1984. At the core of their claim of success was that they were able to reduce costs without compromising their traditional high quality [3].
Perhaps the most ambitious, early project was conducted by HCFA in 1991. Out of a possible 209 pre-applications for participation in this study, four US hospitals were chosen to take part in a demonstration of the feasibility of bundled Medicare payments for both the hospital (Part A) and the physicians (Part B) at a predetermined, negotiated rate. The demonstration project was later extended to three additional hospitals in 1993. A final report of the project findings were published in 1998 [4] in which HCFA realized a savings of $42.3 million on coronary artery bypass surgeries, which was approximately 10 % of the $438 million that had been expected as Medicare payouts. Several other interesting findings were gleaned from this study:
The seven demonstration hospitals were found to have significantly lower in-patient mortality rates than what was seen in risk factor controlled rates in Medicare participating but non-demonstration hospitals.
Multivariate analysis also demonstrated a significant reduction in complication (e.g., post operative renal failure) rates and lengths of stay.
It should be noted that Medicare, as a federal agency, whose original charge was to devise a method of health care cost containment , was now very much interested in quality outcomes and process of care. It was apparent that control of health care costs would not only require some form of bundled payment arrangement with hospitals and physicians but, also, would be permanently linked to clinical outcomes .
One other important notion becomes apparent when reviewing the findings of this early demonstration project: HCFA was keenly aware of the “asymmetry of financial incentives faced by hospital managers versus physicians.” The physician bears absolutely no financial down-side risk. The fact that a patient requires an intensive care unit for 2 days or 20, is irrelevant to the physician. In addition, the pre-procedure negotiated payment to surgeons increases with the complexity of the operation. These more complex surgeries may be associated with a higher cost of care, which is essentially borne by the hospital. This has proven to be a rather vexing problem to this day.
As US health care, in particular, and the US economy , in general, limped into the twenty first century, a consistent theme began to emerge: The enemy of cost containment efforts and simultaneous maintenance of high quality of care was the Fee-For-Service model of reimbursement that began with the Social Security Act of 1965. What started as a reasonable method of assuring appropriate physician and hospital reimbursement while guaranteeing full access to medical care for Medicare beneficiaries had, now, become the very mechanism responsible for out-of-control health care spending and a serious drag on the entire US economy. In addition, the Fee-For-Service method of reimbursement fostered fragmentation of care, poor coordination amongst caregivers, and no incentive to limit resource utilization. The impending US health care crisis was becoming likely and the financial ramifications of rising health care costs were starting to be appreciated as threat to the entire national economy. For the first time, the matter of financial solvency of the entire Medicare program began to enter the national health care dialogue. The current trend in health care spending by the federal government would not be sustainable and the USA began to look for ways stop, or at least, abate this serious downward economic spiral. A new direction in governmental health care policy began to emerge as the realization that costs and quality were irrevocably linked. Policy makers understood that the pillars needed to strategically support this effort would be based on (see Fig. 48.2)
Fig. 48.2
Factors impacting quality and costs
- 1.
Clinical data and subsequent reliance on evidence-based decision making
- 2.
Improvement in patient safety and quality outcomes
- 3.
Congressional legislation that would ensure the viability of the Medicare program
Evidence-Based Decision Making
Accurate, reliable clinical data must be the bedrock of any legitimate effort to contain costs through better clinical outcomes. Substandard care is extraordinarily expensive. Early efforts in the 1990s to introduce “Fast Track” cardiac surgery brought to light an interesting revelation: the ability to reduce hospital lengths of stay in a “Fast Track” program was predicated on improved processes of care [5]. For example, limiting amounts of intraoperative intravenous fluid in the operating room translated into shorter times to extubation, shorter ICU lengths of stay and shorter overall hospital lengths of stay. Better care meant reduced costs.
Efforts to boldly change the processes of care in cardiac surgery require: (a) the total commitment of organizations to submit and share their own clinical data with that of other institutions, (b) the organizational structure to provide robust statistical analysis, and (c) a method of consistent feedback to the participation institutions so as to encourage data-driven changes in the care delivered. The effectiveness of this exercise is directly related to the accuracy, completeness and transparency of data submitted. This truly innovative approach to cardiac surgery (and medicine, in general) began with the pioneering efforts of organizations such as the Northern New England Cardiovascular Disease Study Group (the “NNE”) , the New York State Cardiac Surgery Reporting System , and the Society of Thoracic Surgeons National Database . All three organizations have provided valuable insights into concepts such as the existence of significant variability in clinical outcomes, procedural volume statistics as a surrogate for quality in highly complex surgeries, and the linkage between process and outcome. The “NNE ” represents the voluntary cooperation of several institutions in the northern New England region, which routinely collect, analyze and collectively share clinical results. It is a remarkable example of institutional transparency and cooperation and, as such, has had an enormous effect on health policy for many years.
The link between health care costs and quality of care was coming into sharp focus as a matter of government public policy. Academic research in health policy, numerous private health care consulting firms, and government-sponsored demonstration projects began to become commonplace in the American health care environment. One of the most interesting and revolutionary projects, The Virginia Cardiac Surgery Quality Initiative (VCSQI) introduced many cardiac surgeons to the phrase “Pay-For-Performance” which started in 1994. These true health care innovators, led by Dr. Jeffrey Rich, dedicated themselves to the notion that improved outcomes and quality of care would necessarily evolve from a state-wide system of clinical outcome analysis, data sharing amongst its members and subsequent process of care change and improvement. The VCSQI, in effect, created a global pricing model based on rewards for superior performance and, more importantly, physician and hospital incentives were aligned by a series of common objectives. Much later (2013), in his testimony to The House Committee on Energy and Commerce, Subcommittee on Health, Dr. Rich stated that VCSQI collaborators “point out that a road map of short-term next steps is needed to create an adaptive payment system tied to the national agenda for reforming the delivery system. VCSQI has demonstrated that improving quality reduces cost. For example, using evidence-based guidelines, VCSQI has generated more than $43 million in savings through blood product conservation efforts and more than $20 million by providing the best treatment to patients with atrial fibrillation at the right time” [6].
In the state of New York, the Cardiac Surgery Reporting System was created in 1989 and to this day is an extremely active arm of the New York Department of Health. Unlike many other clinical databases, the NY CSRS is a statewide data registry for cardiac surgery and percutaneous coronary interventions. Participation by all New York institutions performing cardiac surgery is mandatory. Risk adjusted mortality data, at the institutional and surgeon-specific levels, is publically reported. These data are reviewed quarterly and alert letters are routinely sent out to institutions should they be found trending towards statistically significant increases in mortality rates. Those institutions that are demonstrating significantly worse outcomes have in-depth review of individual mortalities by CSRS staff. The institutions are required to provide clinical summaries of cases under review and action plans for process improvement. Occasionally site visits by CSRS staff and consultants are required. These efforts have resulted in dramatic improvements in risk adjusted mortality rates in the hospitals of New York State. Through robust efforts at academic literature production, the New York State CSRS has contributed significantly to both the fund of knowledge in outcomes research, but has, also, demonstrated the power of public policy as an effective agent of improving clinical outcomes and patient safety. Currently, approximately one-third of state governments in the USA require mandatory reporting of clinical data [7].
The Society of Thoracic Surgeons was established in 1964 and currently is an international, nonprofit organization representing over 6600 surgeons, researchers and allied health professionals. In 1989, the STS National Database was created to collect clinical data on every cardiac case performed at participating institutions (currently in excess of 90 % of US cardiac surgery hospitals), provide robust risk-adjustment based on pooled national data, and to provide critical data analysis feedback to participating hospitals (see Chap. 44). This remarkably powerful data registry has allowed for the creation of accurate risk predicting models that are used throughout the world [8]. The obvious importance of these risk models to shape public health care policy by agencies such as Medicare cannot be overstated.
Numerous other clinical data registries have emerged across the country. Data analysis from all of these databases has become increasingly more sophisticated and has allowed for more accuracy in risk modeling. The importance of data registries is evident when considering the critical utility of the STS database in activities such as setting reimbursement rates within the Resource Based Relative Value Scale (RBRVS) for cardiothoracic surgical procedures (as defined by Current Procedural Terminology codes) at the American Medical Association/Specialty Society Relative Value Scale Update Committee meeting (RUC) . Data from the STS database has allowed the STS to offer an accurate assessment of physician work based on time and intensity of each procedure as part of the relative value unit (RVU) valuation by the RUC. These values are then forwarded to CMS for consideration, as mandated by Congress.
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