Pay for Performance “Here to Stay”

Reni CraftNemili Johnson

Imran Khan

August 18, 2008MED_INF 404: Hospital Enterprise Operations

Objectives – Pay for Performance (P4P) Definition and Need

Current State of Healthcare What is P4P and what is the need Plan of Action Stakeholders

Programs Hospital Program Leaders Measurement Reliability Hospital Readiness & Response

Success and Challenges Current Success National Challenges Final Recommendations to Congress

Current State of HealthcareAdults Adults receive 54.9% of recommended care1

53.5% for Acute problems 56.1% for Chronic problems 54.9% for Preventive problems

Children Children receive 46.5% of recommended care2

68% for Acute problems 53% for Chronic problems 41% for Preventive problems

Costs paid out by Medicare in 2007: $181.7 Billion 1. McGlynn, et al NEJM 2003

2. Mangione-Smith, et al. NEJM 2007

Current State of Healthcare• PROBLEM:

• Cost of care• Hospital debts• Uninsured patients• Malpractice lawsuits• Poor quality of care outcomes• Poor patient-safety initiatives• Poor funding resources

• MEASUREMENT: how do we measure the impact?

So… how can we simultaneously meet all Physicians where they are today, and still work aggressively toward the day when real clinical data is used to improve quality locally and nationally?

Marsh: Risk Management Implications of Pay for Performance

Current State of Healthcare

Traditional “Fee for Service” Causes fragmentation Complexity Unreliability Monetary waste

"The current Medicare fee-for-service payment system is unlikely to promote quality improvement because it tends to reward excessive use of services; high-cost, complex procedures; and lower-quality care."

“Medicare’s fee-for-service payments create incentives for providers to specialize in fields that are more resource-intensive at the expense of primary care, which has not fared well under the current Medicare reimbursement systems.”

2006 IOM Executive Summary

What is Pay For Performance?

Also known as "P4P" or “value-based purchasing,” this payment model rewards physicians, hospitals, medical groups, and other healthcare providers for meeting certain performance measures for quality and efficiency.

The Centers for Medicaid and Medicare Services (CMS) define it as “the use of payment methods and other incentives to encourage quality improvement and patient-focused, high-value care.”

P4P – High Level Process

Why the need for Pay for Performance?

“Despite steady growth in health care spending, both private and public payers have become increasingly dissatisfied with the care they are buying. Although the current health care financing system encourages the provision of more care, it does little to ensure that individuals receive appropriate care or that the care they receive is effectively or efficiently provided.”

Agency for Healthcare Research and Quality ColloquiumNovember 9, 2006

Who Are the Key Drivers?

Stakeholders P4P “investment” “Return on Investment”

Consumers • Self-Care management• Switch to “excellent” providers

Improved health & productivity Financial incentives (employer and plan operation)Transparency in public reporting

Employers • P4P program operations• P4P physician rewards• Employee incentives for self-care and switch to excellent providers

Employee health & productivity Healthcare cost savings Employee retention

Health Plans • P4P program operations (costs not paid by self-insured consumers)• Member incentives for self-care and switch to excellent providers

Reduced healthcare costs Increased profitability Competitive positioning/marketing

Providers •Data collection & submission•Practice re-engineering

Performance rewards Reputation for excellence Increased patient volume

Conklin & Weiss, Pay-For-Performance: Assembling the Building Blocks of a Sustainable Program

Action Plan

Source: Paying for Performance - A Call for Quality Health Care by Deloitte & Touch, October 2006

Recommendations for CMS Initiative

Implement pay for performance in Medicare (w/recommendations on funding)

Reward high clinical quality, patient-centered, and efficient care: coordination of care, chronic conditions

Initially reward both providers who improve performance significantly and those who achieve high performance

Institutional providers should publicly report and participate as soon as possible (reporting, then improvement and excellence)

Assist providers w/electronic data collection and implement a monitoring and evaluation system

Institute of Medicine Report: Rewarding Provider Performance (September 2006)

P4P Program Leaders CMS Hospital Quality Initiative

Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) Medicare Hospital Quality Incentive Demonstrations (HQID)

Commercial/Private Sector The Leapfrog Group

Anthem BCBS Quality Hospital Incentive Program Bridges to Excellence (physician) Integrated Healthcare Association (physician)

State Medicaid Programs Health Plans/Managed Care Organizations Hospital programs (in development)

CMS Hospital Quality InitiativeReporting Hospital Quality Data for Annual Payment

Update (RHQDAPU) Intended to equip consumers with quality of care

information Initially developed as a result of the Medicare Prescription

Drug, Improvement and Modernization Act (MMA) of 2003

Deficit Reduction Act (DRA) of 2005 set out new requirements

• FY 2008, CMS requires that hospitals submit data regarding 27 quality measures

• Hospitals that do not participate in the RHQDAPU initiative will receive a reduction of 2.0 percent in their Medicare Annual Payment Update for FY 2009

CMS Hospital Quality InitiativeMedicare Hospital Quality Incentive Demonstrations (HQID)

Demonstration involves partnership with Premier Inc., a nationwide organization of not-for-profit hospitals

Awards bonus payments to hospitals for high quality and reports extensive quality data on the CMS web site Launched in October 2003, initially 3-year program

Extended by CMS through year 2009 to formalize program 250 hospitals across 36 states currently participating Evaluates evidence-based quality measures for inpatients with:

• Acute myocardial infarction (AMI)• Coronary artery bypass graft (CABG)• Heart failure (HF)• Pneumonia (PN)• Hip and knee replacements.

Financial incentive of 1 to 2 percent can be gained by facilities reaching top 20 percent in any one of five categories.

The Leapfrog GroupLeapfrog Hospital Rewards Program (LHRP)

The Leapfrog Group is a coalition of public and private organizations created to reduce medical errors and improve quality and safety in hospitals

Program launched in 2005 Potential savings if hospitals performed as well as top 25

percent for LHRP measures• 66,000 lives could be saved• $18.5 billion could be saved• 145,000 readmissions avoided• 187,000 medical errors avoided

Quality measures endorsed by National Quality Forum and JCAHO

The Leapfrog GroupLeapfrog Hospital Rewards Program (LHRP)

Focuses measures for effectiveness on:• Acute myocardial infarction (AMI)• Percutaneous coronary intervention (PCI)• Community acquired pneumonia (CAP)• Coronary artery bypass graft (CABG)• Deliveries/newborn care

Provides only national benchmark of standards to evaluate performance in the efficiency of care

• How long a patient stays in the hospital• How frequently patients are readmitted to the hospital

Blue Cross Blue ShieldQuality Hospital Incentive Program (Q-HIP)

Launched program in 2003 in Virginia• Northeast Region (ME, NH, CT): 24 hospitals• Georgia: 20 hospitals• New York: 40 hospitals (planned)• Virginia: 60 hospitals• Western Region: (CO, NV): 19 hospitals

Q-HIP performance objectives were adopted from leading organizations including the JCAHO, Leapfrog Group, American College of Cardiology (ACC), Agency for Healthcare Research and Quality (AHRQ) and other respected industry authorities.

Measures specific indicators of care for patients with three common conditions: heart attack, heart failure, and pneumonia

Hospital Response

Source: Paying for Performance - A Call for Quality Health Care by Deloitte & Touch, October 2006

Hospital Readiness – How to Get Started Assess own

readinessContracting with

PayersAchieve staff

buy-in Data Collection and Reporting

Determine which standards can already be measured

Look first to public organizations for performance measurement criteria

Develop formal P4P educational program for medical staff and communication strategies

Use industry standard, public domain measures

EMR system must support P4P goals and reporting needs

Determine if data collection and reporting capability is consistent with P4P data

Secure similar measurement criteria from all payers

Create infrastructure to support program implementation and improvements

Adhere to validation and timing requirements for data submission to payers

Gather unbiased baseline data

Ability to track incremental costs. Is there a “defensible” return on investment?

Establish baseline quality performance and tie bonuses to improvements from baseline

Understand incentives of other key stakeholders

Ensure privacy of data

Gather ongoing performance data

Measurement Reliability CMS is tracking more than 30 nationally defined

measures based on evidence-based medicine

CMS has a quarterly validation process to evaluate the accuracy of patient-level data used in the Hospital Quality Initiative. (BCBS has similar audit program)

Hospitals achieving an overall agreement rate of 80% are considered ‘validated’. From a purely statistical perspective, kappa statistics of 0.80 or better

are frequently considered ‘excellent’, 0.60–0.80 are considered ‘good’, 0.40–0.60 ‘fair’ and less than 0.40 are considered ‘poor’.

Source: International Journal for Quality in Healthcare 2006, Williams

Success of P4P - Premier Hospital Quality Incentive Demonstration (HQID)

Over the first 3 years on the P4P project: Saved lives of an estimated 2,500 heart attack patients Provided over 300,000 additional treatments that met highest quality

patient care standards Treated more than 1.1 million patients across the 5 clinical areas

Success of P4P – Premier HQID

Significant improvement in Composite Quality Scores by the end of 3rd Year in 5 clinical focus areas:

From 87.5% to 96.1% for heart-attack patients From 84.8% to 97.4% for CABG patients From 64.5% to 88.7% for heart-failure patients From 69.3% to 90.5% for pneumonia patients From 84.6% to 96.9% for hip and knee replacement patients

CMS awarded 3rd Year incentive payments of $7 million to 112 top-performing hospitals that included 206 awards and awarded more than $24.5 million over the first three years

P4P plan allowed to measure the impact of quality incentives while consistently meeting accepted evidence-based practice standards

Successful Case Studies

Implementation of P4P in the United States: California – largest P4P program in the country. Financial incentives

based on utilization management were changed to those based on quality measures

Massachusetts Minnesota - achieved $20 million in savings in 2006 Washington Wisconsin - Wisconsin's Department of Employee Trust Funds have

announced premium rate increases in the single digits for the third straight year

Challenges of P4P Maintaining data accuracy and hospital

reputation Multiple stakeholders Limited literature for subspecialties Avoid duplicating multiple initiatives Will the rewards be sufficient?

Initially there is not a positive ROI, but it will continue to improve financially

Unintended consequences Achieve high scores by avoiding challenging

patients Financial incentives could undermine morale

already threatened by commercialization of medicine

De-motivating for those for whom such a level is out of reach

Political Stance Need for agreement and buy-in among

those being evaluated by providing fair objectives and measures

Persuade Congress to facilitate progress towards research by funding Agency for HealthCare Research and Quality (AHRQ)

Standardize the coordination among payers on clinical domains and quality measures

Provide timely evaluations on a broad range of P4P programs and targeted decision support

Conclusion Provides structured guidelines (makes for easier

implementation) [Efficient] Provides incremental phases that have limited

effects for stakeholders [Efficient] Although research is limited, there have been

positive outcomes in some of the study pilots [Effective]

Provides a standardized, comprehensive, evaluation framework [Effective, Efficient]

Provides tools to measure success against annual plans & budget

Public reporting of transparent data may provide future revenue [Equitable]

Conclusion Improved quality and physician attention to

the consumer [Patient-Centered] Changing purchaser and supplier behaviour

through P4P strategies is going to be a slow process, but a successful one in the long run

Improved quality is associated with saving lives and reducing costs. Therefore, P4P can accelerate the rate of adoption of HIT and EMRs, and promote delivery of more preventive services [Safety]

References Mcglynn, E.A., Asch, S.M., Adams, J., et al. (2003, June). The Quality of Health Care Deliverd to Adults in

the United States. The New England Journal of Medicine. Vol. 348. p. 2635-45 Mangione-Smith, R., DeCristofaro, A., Setodji, C. (2007, October). The Quality of Ambulatory Care

Delivered to Children in the United States. The New England Journal of Medicine. Vol. 357. p. 1515-23 IOM Executive Summary. Rewarding Provider Performance: Aligning Incentives in Medcare (Pathways to

Quality Health Care Series) also accessible at http://wwww.nap.edu/catalog/11723.html. http://www.vascularweb.org/professionals/Government_Relations http://content.nejm.org/cgi/content/full/355/18/1845 http://global.marsh.com/documents/Marsh_HealthCare_Risk_Alert_07.pdf http://www.commonwealthfund.org/usr_doc/Rosenthal_testimony_05-17-2005.pdf?section=4039 http://www.premierinc.com/quality-safety/tools-services/p4p/hqi/index.jsp http://en.wikipedia.org/wiki/Pay_for_performance_(healthcare) http://www.iha.org/wp020606.pdf http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=515778