Key Elements: Aligning Financial and Other Incentives

Aligning Incentives Principles

Aligning incentives is a critical underpinning of many of the strategies and actions contained in other areas of the Blueprint. The primary goal of aligning financial and other incentives is to improve the quality, safety and efficiency of healthcare. While larger scale payment reform is needed, this committee sought to prioritize the development of consensus strategies and actions according to what could be incrementally accomplished over the next 24-36 months, in both the public and private sectors.

In terms of the timelines associated with specific actions in this area, many of those who participated in the development or vetting processes agreed that timelines are generally needed to support action, but also agree that timelines are debatable and should be discussed. Thus, the specific timelines included here are preliminary, and more feedback is encouraged as stakeholders such as employers and health plans begin to consider implementation.

In developing the principles, strategies and actions in this focus area, many discussions occurred around incentivizing improved patient outcomes versus incentivizing or supporting technology adoption. While stakeholders agree that the end goal is improving healthcare quality, safety and efficiency, they employ different approaches for arriving at that goal. Some prefer to incentivize quality outcomes only, while others prefer also to support the adoption and effective use of health IT as an efficient infrastructure for quality improvement and measurement. There is no consensus regarding the best approach to this question, and there is no consensus that only one approach will work. More study is needed to examine initiatives that have employed both approaches to identify their benefits and drawbacks.

Many initiatives are currently underway that offer promising strategies for aligning incentives in a manner that supports improved outcomes for patients, and those initiatives should also be supported and studied.

PRINCIPLES

The principles below cover four key areas the committee believes are important aspects of any incentive program. There was strong consensus on the first three principles, but there was also a strong recognition that the fourth principle will require more work and more consensus in terms of its implementation. While it is easy to agree with this principle in concept, there is no common agreement or understanding around who benefits from health IT adoption, and by how much they benefit.

Hypothetically, health plans should benefit through better care and cost avoidance due to improved health, but it is unclear how this really occurs and how much the true future savings might be. Physician practices should benefit with greater efficiency and effectiveness at the same payment rate, but no one knows how much efficiency and how much effectiveness. Incentives cannot be meaningful, phased or appropriately aligned until decision-makers have incontrovertible and quantitative information describing the benefits. This means that all payors and providers will need to work together toward meaningful pilots or demonstration projects that are appropriately designed to convincingly measure these benefits before any significant change in financial incentives will occur.

1. Meaningful Incentives: Any financing or incentive program involving health IT should be meaningful and result in improvements in quality, safety, efficiency or effectiveness in health care.
   
   
2. Phased Approach: Financing or incentive programs should utilize a phased approach involving health IT beginning with the implementation of health IT and leading up to the use of electronic information to support performance improvement.
   
   
3. Assure Interoperability: Any financing or incentive program involving health IT should lead to the use of existing standards to assure interoperability.
   
   
4. Cost Reflects the Benefit: Stakeholders that benefit should share some of the cost related to health IT financing or incentives. To achieve this, more study is needed to ascertain specifically who benefits, and by how much. This information is critical to ensuring that incentives programs can be meaningful, phased, and appropriately aligned. In addition, incentive structures should be altered to accommodate those groups that do not have the ability to pay (e.g. underserved populations).