Quality Over Quantity: Incentivizing Better, Affordable Healthcare

John Pilotte, Director of the Performance-based Payment Polity Group at the Centers for Medicare & Medicaid Services (CMS), has always been interested in the health policy arena. Shortly after college, Pilotte worked for a hospital trade association. He later worked for a consulting firm in their healthcare practice, where he gained extensive experience with the Medicare program. “After having worked on the ‘other side’ in D.C. for 10 years, I felt like there was an opportunity to have a big impact on health policy by working at CMS,” said Pilotte. “It’s like working on consulting projects in that you have to put different pieces together. You work with industry to learn, revisit what doesn’t work and figure out ways to fix the problems to make healthcare policy work.”

But healthcare is complex — Medicare is a huge program that alone covers over 45 million people. As such, designing a system that incentivizes better and more holistic patient care is tricky.

According to a 2016 Gallup poll, only 65 percent of Americans are satisfied with the way the healthcare system works for them. Due largely to confusing requirements and growing costs, overall personal satisfaction with U.S. healthcare has declined among all insured groups since 2014.

“Anyone who spends any time in hospitals and receives these bills knows there has to be a better way,” said Dorobek. “We want accountability, we want affordability and we want to address patient needs. We hear about these issues and complaints anecdotally, but why is healthcare such a hard thing to fix?”

According to Pilotte, the solution lies in getting away from an emphasis on the quantity of services delivered and moving towards recognizing and rewarding quality, high-value care. “We need to create incentives to provide more preventive care, provide more care coordination activities and fill the gaps so patients can experience a more seamless process as they move from provider to provider,” he said.

In an effort to form stronger networks between healthcare providers, Pilotte and his CMS colleague Heather Grimsley started the Physician Group Practice Demonstration Project, for which they were named 2017 Service to America Medals (SAMMIES) awards finalists in the Management Excellence category. Pilotte spoke with Christopher Dorobek on the DorobekINSIDER to discuss how this program has succeeded in delivering high-quality, affordable care within a vast and complex national healthcare system.

The Physician Group Practice Demonstration project began as a pilot program during the George W. Bush administration and became permanent in 2010 under the Affordable Care Act. The project created Accountable Care Organizations (ACOs) — groups of doctors, hospitals and other healthcare providers who come together to provide coordinated care to Medicare patients. Integrating care can be as simple as making sure that doctors work together, do not duplicate tests and can coordinate patients’ prescriptions.

As a pay-for-performance concept, the project worked closely with 10 large medical groups around the country and measured their quality and cost efficiency of care. The demonstration came up with 32 quality measures to evaluate the clinical effectiveness of the organizations in the preventive and chronic disease space, and had a cost measurement scheme to examine the total cost of care. Providers who delivered care more efficiently were able to receive a share of the money they saved.

“One of the big strengths of the demonstration was that participating groups could redesign care to meet the needs of the patients they serve, the unique needs of their communities, and so forth,” said Pilotte. “They had total freedom of how to do that and make it work for their organization based on where their clinicians and leadership felt were the biggest areas of impact.”

In other words, designing a flexible and transparent process was crucial in getting the stakeholder buy-in needed to make ACOs a success. “We may not have always agreed on the results, but there was a general buy-in to the concept and the method. We also had the ability to learn and fine-tune things as we saw them and make the appropriate revisions and updates,” said Pilotte.

Over the five-year demonstration program, the project found that groups were able to both improve quality outcomes and generate shareable savings. As of January 2017, there were 480 Medicare Shared Savings Program ACOs throughout the United States, serving more than 9 million Medicare patients. Collectively, all Medicare ACOs have generated almost $1.3 billion in savings. Hundreds of organizations in the private sector have also voluntarily incorporated the concept, and there are currently millions of non-Medicare patients across the country enrolled in ACOs.

The success of the ACO program holds promising implications for new payment models, incentive structures and other innovative ways to approach public health.

“At the end of the day, we’re ultimately thinking about how to provide better care for the patients through incentives for higher quality and better care coordination. We’re still relatively early on in that process, but I think where we’ll be 10 years from now will look a lot different,” Pilotte concluded.


Enjoying these stories of the federal government’s undercover heroes? Check out the other SAMMIE finalists and follow their successes here. 

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