Feature | August 13, 2007 | Rick Dana Barlow

DRA may be damaging, but one potential alternative may be dangerous

Amid the disappointment and discontent with the budget-gouging Deficit Reduction Act (DRA) at least one alternative may turn out to be more dangerous in the long run.
On the surface, performance-based reimbursement (PBR) may seem like a more positive alternative for outpatient care facilities because it provides incentives for delivering efficacious and efficient service. It motivates facilities to change their practice behavior to improve patient care. What better way to encourage (rather than discourage) clinical, financial and operational improvements, including investment in more advanced (as in more expensive) technologies than to reward them for their efforts and achievement?
Short-term, it’s a novel idea. Long-term, however, it’s a great idea with potentially serious consequences. How? You have to think like a businessperson.
It’s no secret that the federal government and a growing number of payers favor publicizing clinical outcomes and financial data (as in pricing) of healthcare facilities under the overt guise of transparency and empowering consumers to shop for care – and the not-so-covert guise (at least not anymore) of penalizing facilities that provide poor care by adjusting reimbursement.
The strategy makes logical sense – and should have been anticipated from the start. Mess up (via clinical, financial or operational errors, for example) and you lose money. Who wants to pay for inferior care or bad service anyway? Perform good work and produce superior results and you “make money.”
So what happens if a significant number of facilities improve their operations enough that they’re maximizing their PBR totals? They’re delivering outstanding care in a cost-efficient manner. Simple. Insurers will protect their profit lines to the point of reverse motivation by reducing reimbursement. How do they justify this? Two ways: These efficient facilities will more than offset new reimbursement woes by increasing patient volume and because they’re operating so well they don’t need so much money back.
Now we’re back to square one. Forget about any silver bullet with this conundrum.
See you in 60.