Gail R. Wilensky

1
Paying for Performance Starting with MA
Gail R. Wilensky Project HOPE April 9, 2008
2
Pay for Performance Remains Controversial
? Really Mean Rewarding Excellence

that is quality and efficiency

and

? Encouraging Improvement
Besides getting what we pay for now
and dont like it!
3
Whats the Problem?
? Spending growth rates are unsustainable
- 2.5 annual growth faster than the economy
(1960-2004)
? Lots of problems with patient safety
95,000 medical errors
? Lots of problems with quality
On average, about half of whats appropriate
4
Different Types of Fiscal Pressure
For Medicare
? Trust Fund

Insolvency projected in 2019
? General Revenue
Pressure on other govt spending
For rest of health care Pressure on wages Les
s for non-health spending

5
Long Term Pressures are Huge!
If Medicare/Medicaid grow at GDP 2.5
By 2030 will account for 11.5 of GDP
(With Social Security 17)
If Medicare/Medicaid grow at GDP 1
By 2030 will account for 8.4 of GDP

(In 2005 4.2)
6
How Big A Problem?
Some historical facts ---
? Overall tax rate last 50 years 18.5 of GDP
? Allowing tax cuts to expire adds (only) 2 to
rev 2030
? Previous in entitlements handled not by
ing taxes


Major budgetary challenges ahead!
7
Incentives Are A Big Problem
Medicare --
20 years getting it exactly wrong!
Same reimbursement for best in class and worst in
class
(DRGs, RBRVS, Home Care, Nursing Homes and MA)
Physician fee schedule is even worse
penalizes efficient docs

Private sector hasnt been much better
8
First Things FirstNeed a National Measurement
System
? Coherent, goal oriented system to
access/report performance
? Need a National system to reach National goals
? Information must be transparent/available
? Begin with starter set/ then comprehensive
measures
9
2006 IOM Report on P4P
Start now, go slow, active learning
? Phased approach
? Start with pay for reporting
? Initial funding from existing funds except
docs
? Initially use provider-specific funds move to
consolidated pool shared accountability
10
Fortunately, MA Already Has Reporting System
? HOS - Health Outcomes Survey
? HEDIS -- Healthcare Effectiveness Data and
Information Set
? CAHPS -- Consumer Assessment of Healthcare
Providers and Systems
Unfortunately, not all MA plans report
MSAs and PFFS exempted
11
How to Proceed?
Slowly -- in terms of at risk

Quickly -- in terms of start time
Sooner rather than later is best
Dont need new legislation (I think)
12
Budget Neutral Strategies can Vary
Use a portion of the MA premium that is above
FFS
-- Pay out differentially if meet certain HEDIS
levels -- Pay out according to HOS or CAHPS me
asures
Continue public reporting as well as P4P
13
Going Forward
Need to bring in other MA Plans
Need to make quality information available for
FFS in the market area
Begin P4P in other areas of Medicare
Hospitals -- ready as well as MA

Physicians -- critical but harder
14
Many Areas Need Further Research
? Most of the focus has been on quality measures
need more effort on efficiency

? Assess impacts of weighting strategies
quality/efficiency improvement/attainment
? How big an incentive to change physician
behavior?

? How to adjust for social compliance
differences

15
Biggest Worry Unintended Consequences
? Patient selection
? Widening performance gaps
? Increasing disparities
? Teaching to the test

16
Bottom Line Going Forward
? Need to realign financial incentives
? Reward/plans/institutions/clinicians who
provide high quality/efficiently produced care
? Also need to involve consumers
value-based insurance reward healthy lifes
tyles

And better information on comparative
effectiveness
would help!
17
Will These Changes Bend the Curve
? Dont know how much difference better
information and better incentives will make
? Easier politically to imagine these changes
? Alternatives get really ugly, really
quickly