Do Financial Incentives Really Work?

The cornerstone of President Obama’s efforts to improve the quality of health care in the US is a series of financial incentives. These incentives reward hospitals that meet certain requirements, and punish those that do not.

It is still a controversial strategy, several months after the first of these incentives rolled out. Many experts attacked the president’s plan, citing some fairly obvious reasoning.

The idea that people will be motivated to do better if they are paid more as a result may seem like common sense, but medicine is complex, Himmelstein said. Often the measures used to determine success do not match the conditions of care or patient outcomes the program is meant to address, he said. Himmelstein said other fields have struggled with pay-for-performance programs. Under national education policy, schools that score poorly on standardized tests receive less funding. “They’re the ones who need it most,” he said. “Is the right reaction to poor quality that those institutions need fewer resources, not more?”

A study was conducted in August, measuring the efficacy of financial incentives to quality of care. While the results weren’t purely negative, they also didn’t exactly celebrate the President’s victory.

A review of seven studies of primary care programs that paid doctors extra for meeting certain targets, published by the Cochrane Collaboration in September, was inconclusive about the effect on quality of care. “Implementation should proceed with caution,” the authors wrote.

Other studies were less neutral. The New England Journal of Medicine released results showing that financial incentives for performance “did not reduce short-term patient mortality rates.”

What do you think? Are incentives effective in the long term? Do we need a new national strategy to improve quality of care?

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Pam Argeris is a thought leader in the Healthcare Industry and possesses extensive, hands-on experience with CMS compliance, and multiple regulatory bodies such as NCQA, JACHO, and DOI. In her role at Merrill Corp., Pam focuses on developing solutions for compliance and quality assurance, delivered in a cost effective manner to improve beneficiary and prospect communications. You can contact Pam at Pamela.Argeris@merrillcorp.com.

Preparing For PPACA Pt. 3

Last week, we began explaining the details of how the PPACA would be changing the way you do business. Regardless of what industry you are in, human resources compliance requires you to meet these specific healthcare regulations. We are summarizing some of the most complex issues, but you can read ADP’s entire report by clicking here.

Shared Responsibility Requirements

“Health Care Reform does not require you to provide healthcare coverage to full-time employees, but it will impose a potential penalty on those employers with at least 50 employees who fail to do so,” warns ADP. There are very specific requirements in place that employers can use to ensure that they are avoiding this issue.

The author suggests actively managing potential issues by integrating automated time and labor management tools, payroll services, and benefits administration. In this way you can manage assigned hours to reduce exposure to additional healthcare costs and/or federal penalties; help ensure that employees who should be eligible for coverage are actually made eligible in a timely and compliant fashion; and gain ready access to the data needed to track and reconcile with the government for those employees who choose to utilize a Public Exchange.

The PPACA has a broad reach, and could impact many aspects of your company. If you have any questions or concerns about the PPACA, feel free to contact us.

Next week, we’ll be examining some other aspects of healthcare reform, and exploring the plausibility of one of the most controversial Medicare changes.

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Pam Argeris is a thought leader in the Healthcare Industry and possesses extensive, hands-on experience with CMS compliance, and multiple regulatory bodies such as NCQA, JACHO, and DOI. In her role at Merrill Corp., Pam focuses on developing solutions for compliance and quality assurance, delivered in a cost effective manner to improve beneficiary and prospect communications. You can contact Pam at Pamela.Argeris@merrillcorp.com.

Preparing For PPACA Pt. 2

If you think the PPACA doesn’t affect your business, because you aren’t in the health industry, it’s time to think again. Nearly every business, in nearly every industry, will fall under the jurisdiction of the PPACA in one way or another. Fortunately, it is not overly difficult to prepare for.

For most businesses, the PPACA will really only come into effect when dealing with human resources.

According to the Centers For Medicare and Medicaid Services, Office of the Actuary, healthcare costs now account for over 18 percent of the entire U.S. economy, and are expected to account for 20 percent by 2015. Therefore, it’s not surprising that Health Care Reform has dominated the employer-sponsored employee benefit plan landscape and will continue to have strategic and administrative impact for years to come — especially in the area of HR compliance.

This report, from ADP Research Institute, explores the complexities of HR Compliance in the PPACA. Below, we have summed up some of the major talking points from the report. For more detail, you can read all of ADP’s findings here.

Employee Benefits will Lose Flexibility

“Health Care Reform will require that you re-think employee benefits plan design due to both coverage mandates and the nondeductible excise tax on high-cost healthcare coverage,” begins ADP. “Although it seems like a long way off, beginning in 2018 healthcare benefit costs that exceed $10,200 for individual coverage or $27,500 for family coverage will be accessed an excise tax of 40 percent on the amount that exceeds this level.”

What does all that mean? Most employers will have no choice but to limit, or cut, healthcare options for their employees. Employer-sponsored plans will need to change from a model of options and flexibility, to one of control and consistency.

Public and Private Exchanges to Take Precedence

Three types of exchanges will become important to you as they come into effect by 2014. Again, ADP explains:

Limited Exchanges, which most employers offer today, are traditional employer-sponsored plans generally limited to three to six healthcare plan choices. Private Exchanges offer a variety of plan choices, aggregated by a provider or an outsourcer with employer input as to which ones are offered, and enable you to rapidly embrace a Defined Contribution strategy utilizing a qualified funding vehicle. Public Exchanges, required under Health Care Reform and offered at the state and federal levels, will vary by jurisdiction in terms of coverage, quality and participant experience.

 We'll continue next week, with a few more insights from ADP.

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Pam Argeris is a thought leader in the Healthcare Industry and possesses extensive, hands-on experience with CMS compliance, and multiple regulatory bodies such as NCQA, JACHO, and DOI. In her role at Merrill Corp., Pam focuses on developing solutions for compliance and quality assurance, delivered in a cost effective manner to improve beneficiary and prospect communications. You can contact Pam at Pamela.Argeris@merrillcorp.com.