California Pay for Performance: Understanding the Impact of Provider Incentives for Quality

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California Pay for Performance Understanding
the Impact of Provider Incentives for Quality

• Tom Williams
• Executive Director
• Integrated Healthcare Association
• AHRQ Annual Conference

September 9, 2008
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IHA Sponsored Pay for Performance (P4P) Program

• The goal To create a compelling set of
  incentives that will drive breakthrough
  improvements in clinical quality and the patient
  experience through
• Common set of measures
• A public scorecard
• Health plan payments

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Plans and Physician Groups Whos Playing?

• Health Plans
• Aetna
• Blue Cross
• Blue Shield
• Western Health Advantage
• Medical Group and IPAs
• 230 groups
• 35,000 physicians

• CIGNA
• Health Net of CA
• Kaiser
• PacifiCare/United

12 million HMO commercial enrollees
Kaiser participates in the public reporting only
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Measurement Year Domain Weighting
Domain 2003-6 2007 2008 2009
Clinical 40-50 50 40 40
Patient Experience 30-40 30 25 20
IT Adoption 10-20 X X X
IT Systemness X 20 15 20
Coordinated Diabetes Care X X 20 20
Appropriate Resources Use X X X Gain-sharing

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Public Reporting
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Health Plan Payments

• Each health plan determines their own reward
  methodology and payment amount
• Most plans pay on relative performance, after
  meeting thresholds
• 38 M paid out in 2004
• 54 M paid out in 2005
• 55 M paid out in 2006
• 65 M paid out in 2007
• (about 1.5 to 2 of base pay on average)
• Total paid from 2004 through 2007 (for prior
  measurement year) is over 210 million

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Physician Group Engagement

• Program Strengths - Physician groups are highly
  engaged, 74 believe the measures are reasonable,
  widespread support for increased incentives, and
  belief the program has increased the focus on
  quality improvement and IT capabilities.
• Program Weaknesses - Lack of consumer interest in
  public reporting and concern about the potential
  for too many measures.
• Overall Rating - 65 rated the program as a 4
  or 5 (on a 1 to 5 scale) for importance with a
  mean score of 3.86.
• Source Program Evaluation by RAND/UC Berkeley

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Health Plan Engagement

• Program Strengths - Increased collaboration, push
  toward QI, investments in IT, and greater
  accountability and transparency.
• Program Weaknesses - Improvements viewed as
  marginal, concerns about teaching to the test,
  lack of a positive ROI, and failure of clinical
  data fed to raise plan HEDIS scores.
• Overall Rating - 2.5 mean score (1 to 5 pt.
  scale)
• Source Program Evaluation by RAND/UC Berkeley

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Lessons Learned 1 Measures

• Lesson
• Clinical improvement has been
  incremental
• Evidence points to teaching to the test vs.
  systemic improvements

• P4P Response
• Created Coordinated Diabetes Care Domain to focus
  attention on redesign needed to drive
  breakthrough improvement
• Considering use of multiple chronic care measure
  domains integrated with care process measures to
  drive systemic change

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Summary of Performance Results

• Clinical continued modest improvement on most
  measures
• 5.1 to 12.4 percentage point increases since
  inception of measure
• Patient experience scores remain stable but
  show no significant system wide improvement
• IT-Enabled Systemness most IT measures are
  improving
• Almost two-thirds of physician groups
  demonstrated some IT capability
• Almost one-third of physician groups demonstrated
  robust care management processes

Continued performance improvements but
breakthrough point not achieved yet.
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Clinical Results Baseline MY 2007
California P4P Program
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California P4P HEDIS Scores Surpass National
Average

• The national average outperformed the California
  plans in the baseline year 2002
• The California plans rate of improvement over
  the baseline year has increasingly exceeded the
  rate of improvement of the national average
• In MY 2006, the California plans outperformed
  the national average performance
• Includes commercial plans and excludes Kaiser
  (Not fully in P4P until 05)
• (NCQA Study, 2007)

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IT Measure 1 Population Management Activities
California P4P Program
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IT Measure 2 Point-of-Care Activities
Percentage of Groups
California P4P Program
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Lessons Learned 2 Regional Variability

• Lesson
• Wide variation across regions exists contributes
  to overall mediocre statewide performance
• Big gains possible with focused attention on
  certain regions

• P4P Response
• Pay for and recognize improvement (20 of payment
  for 2007)
• More fundamental change in calculus of payment
  for improvement for 2008/09 using CMS approach

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Health Disparities and California P4P Clinical
Performance Variation
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Health Disparities and California P4PA Tale of
Two Regions
Clinical Performance
P4P Performance Score
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Health Disparities and California P4PA Tale of
Two Regions

• Inland Empire Bay Area
• PCPs/100K Pop. 53 116
• Pop. Medi-Cal 17 12
• Hispanic 43 21
• Per Capita Income 21,733
  39,048

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Health Disparities and California P4PA Tale of
Two Regions
Clinical Performance
P4P Performance Score
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Are Quality Disparities Correlated with
Physician Reimbursement Disparities?

• The data and subjective experience suggest
• Physicians groups, located only in
  geographies with low socioeconomics, receive
  disproportionately lower reimbursement across
  their practice, resulting in diminished physician
  and organizational capacity, reducing both access
  and quality of healthcare, even in a uniformly,
  well-insured population.

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P4P Payment Incentives

• Fundamental reimbursement disparities appear to
  be the main culprit however P4P should at a
  minimum not increase reimbursement disparities
• Payment for absolute and relative performance
  should be balanced with payment for improvement

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Paying for Improvement
Survey Response What of total bonus payments
by health plans should be allocated to
improvement vs. relative performance? (n200, IHA
Stakeholders meeting, 10/4/07)
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Paying for Performance Improvement
Excerpt from CMS Hospital Value-Based Purchasing
Listening Session 2, April 12, 2007
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Lesson Learned 3 Incentives

• Lesson
• Incentives may not be properly targeted or
  structured to achieve desired outcomes
• Amount of pay must keep pace with number of
  measures

• P4P Response
• Increased attention to pay
• Resolved antitrust concerns formed Payment
  Committee
• Reduce payment variability through methodology
  recommendations, including minimum payment
• Eliminate black box by advanced notice of
  payment methodology

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Lesson Learned 4 Affordability

• Lesson
• Diminishing affordability of coverage demands
  greater attention to cost
• Health plan commitment is wavering in the absence
  of a clear ROI

• P4P Response
• Implement cost efficiency and appropriate
  resource use measures and gain sharing
  incentives.
• Develop business case and ROI
• develop method to measure ROI
• move HEDIS scores to higher levels of performance
  versus nation

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Cost Efficiency Measurement

• Episodes of care testing
• Resource use measure development and
  implementation (e.g., readmission w/in 30 days)
• Hospital P4P under consideration
• Incentives based upon gain sharing

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California Pay for Performance

• For more information
• www.iha.org
• [phone]
• Pay for Performance has been supported by major
  grants from the California Health Care Foundation