Thoughts from the Executive Director

In response to Not Running a Hospital Blog,

CPR's Executive Director Suzanne Delbanco, PhD shares these thoughts:

I guess our scorecard touched a nerve. But please don’t assume that lack of immediate response on social media during our launch is silent agreement. Now, with a moment to reflect, let me address briefly what I saw as your prime arguments. You suggest that:

  1. There’s no good evidence that fee for service creates tives for volume.

It is true that there is not conclusive, scientifically-sound evidence about how best to pay for health care. However, based on economic theory, a service for which payment exceeds cost may encourage a provider to deliver more of that service (therefore increasing volume).  But perhaps the arguments of others about the need to move away from fee-for-service might be more persuasive:

Here’s what MedPAC had to say:

MedPAC concluded that “the current unrestrained [fee-for-service] payment system has created a rate of volume growth that is unsustainable” and “Part of the problem is that Medicare’s fee-for service (FFS) payment systems reward more care—and more complex care—without regard to the quality or value of that care.” (

Here’s what RAND found in the 1980s:

The RAND Health Insurance Experiment (HIE) evaluated the effect of FFS vs. HMO care and canceled out the potential confounder co-insurance represents. In the study, individuals were randomly assigned to the HMO and to a fee-for-service plan, and in both cases they faced no cost sharing, allowing for an “apples-to-apples” comparison. The RAND study found that spending per enrollee in the staff-model HMO plan was about 30 percent lower than spending in the fee-for-service plan, with no evident differences in the resulting health of enrollees. A more recent reboot of the paper is available here:

And more recently, in Massachusetts:

Rand identified several payment options that may reduce costs and improve quality

  1. Clinical variation not tied to “rate design.” Most non-FFS today payment today contains no component (or incentive) that varies with or pays for non-visit functions that are thought to support the quality of care. Should we stick with our current method because there is limited scientific evidence that other methods work? Sure, change for change’s sake doesn’t make sense. But given that costs are rising at an unsustainable rate with little to no correlation to value, and many national experts believe that payment is the culprit, shouldn’t we experiment vigorously and evaluate rigorously, rather than standing still?
  2. Reform methods don’t address costs. CPR does not advocate a particular method of payment; there’s no one-size-fits-all solution. But there is mounting evidence that different methods can/may lead to better value. See again [].
  3. Why not just improve case management for the highest utilizers? Great idea. In fact, one of CPR’s employer members pioneered such an approach. It certainly would be much simpler if only the highest utilizers suffered from overuse, misuse and underuse of health care services and paid higher than competitive prices for care. But alas, these problems affect all patient populations.
  4. Just pay cognitive specialists more. From the very beginning, CPR has advocated for shoring up primary care. Our payment reform principles, developed by a multi-stakeholder advisory committee that included physician and hospital representatives stated: “Creating market incentives will require more highly valuing primary care functions related to evaluation, counseling and coordination relative to the value of procedural and diagnostic interventional care.” This will likely require a rebalancing of payment between primary and specialty care. Indeed, our Scorecard counts care coordination fees and other non-visit payments in the category of payment reform. In fact, we go further: one of five benchmarks in the Scorecard follows annually the ratio of spending for outpatient services that goes to specialists and primary care physicians. Our inaugural Scorecard found that todayof the total outpatient payments made to specialists and primary care physicians, 75% is paid to specialists and 25% is paid to PCPs.

We invite all stakeholders to work with us on the path to a higher-value health care system. It’s hard to manage what you don’t measure. Tracking our progress over time an annual National Scorecard on Payment Reform will help keep us on the path.