Patient Safety from the Payer's Perspective

1. Patient Safety from the Payer's Perspective Strategies for Protecting Patient Safety American Society of Law and Medicine Suffolk University, Boston, MA September 12, 2003 Jeffrey Kang, MD, MPH

2. Role of the Regulator versus the Purchaser • Regulators focus on mandatory structural standards and termination (or de-licensure) of unsafe providers • Purchasers focus on driving continual quality improvement (or safety improvement) through competition

3. Improving the Distribution • compliance • system change & technical assistance • consumer information • non-economic incentives • economic incentives Actual 50 40 30 20 10 0 FREQUENCY 1 2 3 4 5 6 7 8 9 10 PERFORMANCE (safety) Page 5

4. What Is Needed from Regulators • Imposition of mandatory structural standards that have been demonstrated to improve patient safety • Technical assistance • Mandatory reporting of “never events” - including revealing the patient • Mandatory profiling on standard measures in the aggregate without revealing the individual patient and with peer protection

5. The Role of Purchasers • Stop paying for “never events” (note: this begins to move us from fee for service to “fee for outcome”) • Member education with or without incentives to go to safer providers • Non-economic incentives for providers who profile as safer • Economic incentives for providers who profile as safer

6. Member Education and Incentives • Payers tend to interact with members late in the decision-making process so a member education approach not likely to be effective • Differential cost-sharing (or waiving of cost-sharing) for those members who go to safe providers maybe more effective but difficult to administer

7. Non-economic Incentives • Administrative relief • Improved claims processing and cash flow • Patient volume through education, referral, and incentives • Patient volume through network restriction (requires public acceptance that not all providers are equally safe)

8. Economic Incentives • Rewarding Performance - adding more money into the system and paying more for safer providers • Performance guarantees - contracting with providers to guarantee performance in order to maintain existing payment levels

9. Questions or Discussion