Federal Panel Suggests Incentives for Improving Health Care

By ROBERT PEAR

ASHINGTON, Oct. 30 — The National Academy of Sciences said today that Medicare, Medicaid and other government programs should reward high-quality health care by paying higher fees or bonuses to the best doctors, hospitals, nursing homes and health maintenance organizations.

In a report requested by Congress, the academy said the federal government should establish standard measures of quality, assess the performance of each health care provider and publish comparative data for use by consumers.

The report, by the academy's Institute of Medicine, said that after years of fitful, disjointed efforts, the government must use its leverage as a buyer, regulator and provider of care to upgrade the quality of services received by 100 million Americans in six different federal programs.

"The federal government should take full advantage of its influential position to set the quality standard for the entire health care sector," said Dr. Gilbert S. Omenn, professor of medicine and public health at the University of Michigan, who was chairman of the 17-member panel that issued the report.

One way to do this, Dr. Omenn said, is to link pay to performance. Providers achieving "exemplary levels of performance," as measured by government criteria, might receive 5 percent to 15 percent more than the standard payment, the panel said.

The academy issues dozens of reports each year, and many generate little response. But today's recommendations are likely to produce results in the near future, because Congress, employers, insurers and some health care providers are receptive.

The Institute of Medicine touched off an immense amount of activity in 1999, when it estimated that 44,000 to 98,000 people died each year because of medical errors in hospitals.

In today's report, the institute proposes an ambitious schedule:

¶Over the next two years, the government should issue standards to evaluate treatment for 15 common health conditions, like diabetes, depression, osteoporosis, asthma, asthma, heart disease and stroke.

¶By 2007, doctors, hospitals and other health care providers in the six federal programs would have to submit data to the government showing how they treated patients with any of the 15 conditions.

¶Starting in 2008, each federal program would publicly report data comparing the quality of care available from all health care providers who had treated its patients.

The recommendations assume that doctors and other health care providers will take major strides to computerize medical records, perhaps with tax credits and other federal incentives for the purchase of information technology.

Under the panel's recommendations, Dr. Omenn said, health care providers would have to submit "audited patient-level data," and it makes no sense to cull such information from paper medical records and insurance claim forms.

The six programs in question are Medicare and Medicaid, for the elderly, disabled and poor; the Children's Health Insurance Program; the Defense Department's Tricare program, for military personnel and their dependents; veterans' health programs; and the Indian Health Service.

Doctors said they feared the new reporting requirements would be burdensome. But Dr. Omenn said the proposals could actually reduce the burden by establishing one set of quality measures that would be used by all six programs and perhaps by private insurers as well.

Hospitals endorse the goal, but question some of the details. Elisabeth Belmont, corporate counsel for Maine Health, which operates seven hospitals, a nursing home and a home health agency in Maine, said plaintiffs' lawyers could argue that any deviation from the "minimum standards" of care constituted negligence, justifying a malpractice lawsuit.