Cost and Quality Analysis

Grand Canyon University

Ethics, Policy and Finance in the Health Care System

NUR 508

Cost and Quality Analysis

In the health care arena, there are two entities that make up the health care system; the public sector and the private sector. The public sector consists of agencies that are financed by the government which include Medicare and Medicare. The private sector has agencies that are not affiliated with the government that are financed through private funding which include profit and non-profit organizations, partnerships, employee health insurance, private pay insurance companies and charitable organizations. Health Maintenance Organizations(HMOs) and Preferred Provider Organizations(PPOs) would fall under the private sector as well.

With the ever rising cost of health care in the United States, all organizations involved in health care are reexamining their current policies and practices and developing initiatives to assist with lowering the cost of health care while continuing to adapt or implement policies that keep or improve the quality of care. This can be a challenging task for the public and private sectors. Consider Medicare, their primary goal is to supply quality health care to individuals who qualify and they are not competing with other groups for a profit. Medicare has developed many initiatives to decrease the health care deficient and address the cost vs. quality and quality vs. quantity issues. The Physician’s Quality Reporting Initiative(PQRI) is one such tool that is being implemented today. This program allows physicians and specialists to earn a 1.5 percent bonus on their reimbursements from Medicare. “The PQRI is Medicare’s first attempt to implement a widespread pay for performance (P4P) (or pay for reporting) program with hard dollars attached to it. However, the bonus may be secondary to Medicare’s expanding interest and ability to measure and report physician performance. The reported data will be used by Medicare to generate confidential reports to physicians on their performance”(Glusman, 2007). The first study that focused on the PQRI was completed with optimal outcomes for the patient and a huge cost savings to Medicare. ”U-M was one of only two participating groups that achieved both of the project’s aims: to provide the highest-quality care on all 27 of the project’s heart and diabetes measures, and to contain health care spending growth for all traditional Medicare patients, including those with costly chronic illnesses. As a result, U-M will get to keep $1.24 million of the funding that Medicare would have otherwise spent on the care of U-M patients in that year, and will also earn more than $460,000 as an incentive for providing high-quality care”(“Medical News,” 2008). In reviewing the other side of the spectrum, there have been unintended consequences with the implementation of the PQRI. A study was completed by the Walsh Center for Rural Health Analysis at the University of Chicago. Eight states were involved which conducted the study in the rural areas of each state. Conclusions were as follows; rural practices – which tend to be smaller and have fewer resources and a less developed quality measurement infrastructure – may face greater challenges to participating in PQRI than their non-rural counterparts, practices with electronic medical records have less marginal costs associated with reporting to CMS, and the lack of feedback from CMS on the reporting process created barriers and concerns with the participants in these rural areas(Meit, 2010).

When taking into consideration the private sector, the managed care movement of HMOs and PPOs, they promised much to decrease the cost of healthcare, and continue with the same quality care as the clients were accustom to. Under the PPO program, which was formed by physicians and hospitals to serve the private sector, its main goal was to guarantee a certain amount of business to the physicians and the hospitals at a contracted or discounted rate. Physicians continue to get reimbursed for services provided, and the hospitals would have a “predictable” admissions rate. To assist with controlling cost, the insured would receive a discounted fee for care by one of the preferred providers. Second opinions and pre-authorizations for hospital admissions are also requirements. “As of 2004, PPOs were the most popular managed care plans with a 55 percent market share”(Barker, 2009, p. 225). “In the private sector, managed care has failed in its promise to prevent sustained escalation in costs. Once all the excess was squeezed out, further cuts could only be achieved by cutting essentials. Moreover, there has been a major public backlash against the restrictions imposed by managed care, forcing many state governments to pass laws that prevent private insurers from limiting the health care choices of patients and the medical decisions of physicians”(Relman, 2007). In light of the managed care programs ineffectively managing cost and quality, there have been reports and literature that suggest that a single payer system would decrease administrative cost as much as 99.6 billion dollars annually(Zycher, 2007). This in essence could cover many of the uninsured population in the United States today.

How does cost and quality affect evidence based practice? Consider the research that the

Agency for Healthcare and Research and Quality(AHRQ) has completed, and the initiatives that

facilities have implemented due to results of findings form the work of the AHRQ. A prime

example is the “Acute Cardiac Ischemia-Time Insensitive Predictive Instrument. Widespread

use of the ACI-TIPI could result in more than 200,000 fewer hospital admissions and 112,000

fewer coronary care unit admissions each year, for an overall annual savings of $728 million.

This software runs a new electrocardiogram (EKG) machine that can help ER physicians more

quickly identify patients who are having a heart attack and make decisions about thrombolytic

therapy to break up blood clots. The Food and Drug Administration (FDA) has approved this

software for use in hospital emergency rooms and by pre-hospital emergency personnel. ACI-

TIPI was developed with AHRQ support”(“AHRQ,” 2002). By applying this evidence based

practice, the patient will receive better care from the nursing staff and physicians while saving

millions of dollars annually.

References

Agency for Healthcare Research and Quality [US Department of Health and Human Services comment]. (2002, ). Retrieved from http://www.ahrq.gov/news/costsfact.htm

Barker, A. M. (2009). Managed Care Chapter 11. In A. M. Barker (Ed.), Advanced Practice Nursing ( ed., pp. 219-240). Boston: Jones & Barnett.

Glusman, D. (2007, July 7). Physician Quality Reporting Initiative. Physicians News Digest. Retrieved from http://www.info@physiciansnews.com

Medical News Today. (2008). Retrieved from http://www.medicalnewstoday.com/releases/118315.php

Meit, M. (2010). Walsh Center for Rural Health Analysis. Retrieved from http://www.norc.org/NR/rdonlyres/BFF4D25F-6989-4DC7-9A61-C6BDCB6EE412/0/FinalReportThePhysicianQualityReportingInitiativeAugust2010Final.pdf

Relman, A. S. (2007). Restructing The US Health Care System. Retrieved from http://www.issues.org/19.4/relman.html

Zycher, B. (2007). Comparing Public with Private Health Insurance. Retrieved from http://www.manhattan-institute.org/html/mpr_05.htm