High-quality cognitive work bends outcomes and costs, yet gets paid the same as low quality work. Outcomes-linked payment can change that.
When a missed discharge antibiotic spirals into permanent damage, chronic infection, suffering, and cost — payers reimburse catching it the same as missing it.
PROBLEM:
Procedures are easier to price: payers just need to check indications.
But cognitive work is different: it ranges from unnecessary to life-saving, and payers can't sort it out without armies of expert clinician-auditors. So they flatten it into one fee schedule that undervalues and disincentivizes the very thinking that produces the best outcomes.
High-quality cognitive work is the foundation of whole person clinical reasoning — and that's what bends both outcomes and costs.
SOLUTIONS:
One answer is outcomes-linked payment.
CMS's Advanced Primary Care Management (APCM) fee (essentially a new fee-for-service code) is a start. But the breakthrough comes when that monthly payment is tied to results — progressively higher bonuses for cutting hospitalizations by 10%, 15%, 20% over 2-3 years.
The broad outcome of reduced hospitalization rates represents quality of life and timely treatment of decompensation to confine it to the outpatient setting. That makes it sufficient to use as the outcome to base payment on.
I would advise against directly linking incentives to costs, as that may generate perverse incentives for providers who are supposed to act as patient fiduciaries.
This payment lever is the opposite of capitation, which doesn't just discourage but can actually penalize and hollow out complex cognitive work. Outcomes-linked FFS brings forth the high-quality thinking PCPs must do to improve outcomes, and that means reduced costs.
Guardrails are needed to prevent gaming (e.g. upcoding, premature hospice entry). For upcoding, CMS already has auditing mechanisms, but these need to focus more sharply on ICD-10s. For premature hospice entry, work is needed on assessing whether and how much local systems can add quality life years to common advanced complex patient profiles. I'll take up the hospice issue again in my next post.
This is one lever to make high-quality cognitive work viable in primary care, and patients will be the winners.
QUESTIONS:
• Do you think outcomes-linked payment is a missing lever for primary care reform?
• What safeguards would you put in place to make outcomes-linked payments work?
Outcomes-linked payment is one missing incentive that can finally unlock Whole Person Longitudinal Complex Care. In my next post, I'll discuss a second lever — and also float a thought experiment about patient co-pays as a third lever to validate value and curb gaming.