In Medicare, let's start paying for what we want

The huge financial crisis looming for Medicare as baby boomers retire calls for taking a closer look at the results we're getting for the $300 billion the program spends on health services each year.

Medicare pays doctors more for providing more services and for providing more technically complicated services, without asking how well those services were performed or whether they produced better outcomes for patients. The system is a perfect example of the old maxim "you get what you pay for," because that's what Medicare gets - more services without any assurance of their quality or value.


Congress recently required doctors to report data on quality in order to get an increase in their Medicare payments. Opponents of this move argue on the one hand that Medicare should not be telling doctors how to practice and on the other that Medicare should not be paying them more to do what they should have been doing in the first place.

Both of these arguments miss the main point: With the new requirement, Congress has declared that Medicare should be moving from a system in which payments are tied to the quantity and intensity of services doctors provide to one in which payments reflect the quality and value received by the program and its beneficiaries - an approach known as "pay for performance." That is a step in the right direction.


We need to recognize that Medicare pays for "performance" now: highly variable performance that fails to meet our standards or to justify the tremendous amount we spend on it. Medicare needs to move from the current model, under which it pays for "more" and "more complicated," to a new model in which it pays for "better" and "more valuable." In other words, if indeed you get what you pay for, we ought to start paying for what we want.

Asking doctors to report data on quality measures should not be looked at as telling them how to practice, but rather as letting them practice more the way they would like to. The aim is to counter the strong incentives that encourage excessive procedures rather than more-personalized care and patient management with new incentives that identify and recognize the aspects of care that all of us - physician, patient and payer - would like to see more of. It's less a matter of rewarding good doctors and punishing bad ones than aligning payment incentives with what we all want, so that all doctors have the opportunity (and incentive) to provide better care.

To be sure, we still have a lot to learn about how to measure quality. But we've made tremendous progress, and we need to work together to improve on that score. We're not disputing that the current payment system needs broader reform, but - whether or not such reform can be accomplished in the near future - knowing more about quality and figuring out how to pay for it have to be part of anything we do.

Because costs are a major concern, we need to encourage not only quality but also efficiency. There are different ways to do that, but whatever we do, these two aspects of health care performance must be considered together rather than separately. Quality without efficiency is not sustainable, and efficiency without quality is of no use. If we don't start to measure and pay for both, we'll end up with neither. And that would be a tragedy, not only for Medicare but for its doctors and other providers, and - most important - for its beneficiaries.

Stuart Guterman is senior director of the Commonwealth Fund's Program on Medicare's Future. His e-mail is