The White House announced ambitious plans earlier this week for Medicare to reward doctors for better quality care. (AP Photo/Molly Riley)

The Obama administration earlier this week announced a not-so radical idea: Medicare, the massive health-care program for seniors, should do a much better job of paying doctors and hospitals for quality, not quantity, when it comes to care. Instead of paying a flat fee for each service, the administration said by 2018 it wants half of Medicare payments to hospitals and care providers to be calculated based on whether patients see better results.

Because Medicare is such a huge part of overall health care spending, the hope is that these changes will trickle out to doctors offices and hospitals across the country, reshaping how everyone gets treated. And many of these same efforts are already under way in the private sector.

On its face, it sounds reasonable enough. Who doesn't want to cut waste in America's $2.9 trillion health-care system and improve the kind of care that patients get?

But actually determining the quality of this care is tough business.

The financial stakes are high for the health-care industry and patients. For example, hospitals can face as much as a 2 percent pay cut from Medicare this year if they have especially high rates of patients returning within 30 days being discharged. The tricky thing there is that higher readmission rates don’t necessarily indicate a hospital isn’t as good – there are other factors to consider, including where the hospital's located and the mix of patients.

The number of ways that quality is measured is vast. By one count, 33 different care programs within Medicare used a combined 1,676 reporting measures last year, and about half of those measures were unique to just one program. Another 2013 study of 23 commercial health plans found 546 distinct quality measures, with very little overlap with reporting requirements in federal programs.

There's one group at the center of all this trying to make better sense of how to define quality, and how to give doctors, hospitals and other health-care providers the right financial incentives to pursue a more rational health-care systems. It's known as the National Quality Forum, a Washington-based nonprofit pulling together a wide range of stakeholders to reach greater consensus on how to get the best value from the country's health-care dollars.

For the last four years, the NQF has convened expert panels to make recommendations on how to measure quality across 20 Medicare initiatives that reward providers for delivering better care. This includes programs like the billions of dollars toward the adoption of electronic health records, programs rewarding hospitals for patient satisfaction, new incentives for providers to group together to deliver care on a budget, and more.

The group, under contract with the federal Centers for Medicare and Medicaid Services, released 2015 recommendations Friday after receiving 1,100 comments on more than 200 possible reporting measures, which include wide-ranging items from how often patients fall, nurse staffing levels, and whether patients receive follow-up care. The vast majority of these quality-based Medicare payment programs are just a few years old, so everyone’s still tinkering with the formula based on the best available evidence.

This year's recommendations reflect that there needs to be "a much deeper bench" of quality metrics amid the greater shift toward care emphasizing quality, said NQF president and chief executive Christine Cassel. "You can't do value-based purchasing unless you define value," she said. There's also a major effort to better understand how patients respond to the treatments they receive and to better align the varying quality measures across the federal programs, as well as with the private sector.

Naturally, there are reasons to be skeptical about the administration's ability to hit its goals. And as the NQF has previously pointed out, these pay-for-performance goals can sometimes miss.

I spoke with Cassel about how her organization evaluates quality, why fee-for-service medicine is dying and what this transformation means for patients. Below is a condensed transcript, edited for brevity and clarity.

JM: How much does the perspective of patients factor into these recommendations?

CC: A majority of our board is consumers and purchasers — people paying for care. I think that's a really important aspect to the legitimacy of what we do and frankly the relevance to patients.

It's also part of the frontier now for measurement science. Increasingly, what we're trying to get is the patient-reported outcomes for every single condition or every kind of hospital or health-care facility experience — how did the patient do. It's not just patient satisfaction in the sense were people nice to you and respectful, as important as that is. It's: Did you get your questions answered about your specific condition? Are you actually feeling better? If you had a knee replacement, are you walking three months later?

Those kind of things aren't really captured in the usual quality measurements that we think about. That's where the field is going, and NQF is kind of at the forefront of that field in bringing people together who are doing the research to create those kind of measures.

We're still not really sure what value-based payment is actually getting us. The studies are either inconclusive or they show modest improvements. Should that give us caution about moving too quickly to value-based payments?

I think we are definitely in a transition and we have a lot to learn. But I don't think that means we're moving too quickly. I think we have enough robust quality measures now, that we have the guard rails and the information that we need to protect patients.

At the same time, we know we need to get rid of waste. We have on many different authoritative reports that up to a third of health care spending is in waste. We know we spend more than any other country in the world, and we have pretty good evidence we're not getting as much value as we should be for that. We need to figure out how to provide more accountability about what people get for their dollar, especially when it's the patients more and more who are paying out of pocket for so much of these things.

What do we know about providers' ability to report on these quality measures. Is it getting easier for them?

It's very variable. If you're a physician in a group practice in a big integrated system, like Mayo Clinic or Kaiser, the whole thing is invisible to you. The system collects the data on their electronic record, and it reports to whoever needs it. You get the quality report card, and they compare all the doctors in the system and they learn where they need to improve and that's why they get such good results — they really use the data.

If you're in a small practice of four or five people and you're just getting used to your electronic health record, then it really is a lot of extra work for these people. The nature of the electronic health records, the way they currently are, you can't just get an app and say, "OK, you push this button and you report what you need to report to CMS." You actually have to collect the data separately, so I think that's the next frontier in the health-care data world, to make the reporting process much more seamless.

What do you think of the goals the administration set earlier this week — the fact that they even set the goals, and do you think these measures are achievable?

I do think that they're achievable, and I think it's a good thing that they set these goals. I think in order to change the system of care, we have to be much more efficient and more patient-centered. We have to move away from fee-for-service payment because it just doesn't accurately reflect the complexity of the kind of care that patients need.

It means changing for a lot of us who grew up in the old system. You have to change the whole culture of an organization— it's very hard to do when you have a foot in each camp. So I think we're going to be better off the more rapidly we move people to really wholeheartedly embrace this new system and having not just the professional motivation — which they already have — but the financial motivation to really drive to improvement.