PAY FOR PERFORMANCE

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PAY FOR PERFORMANCE

• Quality Partners of Rhode Island
• May 16, 2007
• By Arthur A. Klein, M.D.

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WHAT IS PAY FOR PERFORMANCE /PAY FOR
PARTICIPATION ?

• Payment programs that provide financial rewards
  to providers who achieve certain performance
  expectations.
• Performance is usually measured in terms of
  I.O.M. aims
• healthcare must be
• Effective
• Safe
• Consumer-centered
• Timely
• Efficient
• Equitable
• Pay for performance programs can be expected to
  publicly report comparative performance data.
• Pay for performance is likely to be revenue
  neutral.

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WHY SO MUCH INTEREST IN PAY FOR PERFORMANCE?

• There is general acceptance that the are serious
  problems with the quality of healthcare delivery
  in the U.S. (I.O.M. Reports).
• Suboptimal outcomes
• Efficiency
• Public health wellness issues
• Safety
• There is also general belief that quality and
  efficiency problems arise from poor systems, not
  necessarily poor providers.

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WHY SO MUCH INTEREST IN PAY FOR PERFORMANCE?

• 3. Exacerbating these concerns are rising health
  costs
• US healthcare bill is 2 trillion
• Healthcare inflation at 1.5 to 2 x national rate.
• Per capita healthcare spending in U.S. greatly
  exceeds that of other industrialized nations.
• Health insurance costs an average of
  12,000/family/year.
• 4. There are glaring examples of regulatory
  accountability and transparency which have failed
  to improve outcomes (NYS Cardiac Reporting
  Initiative).

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WHY SO MUCH INTEREST IN PAY FOR PERFORMANCE ?

• 5. Traditional payment systems are increasingly
  viewed as ineffective or even antithetical to
  addressing quality, safety and efficiency.
• Fee for service providers may be financially
  penalized for safer and more effective care.
• No upfront provision for
• Safety training.
• I.T. investments.
• Redesigning care processes.
• 6. National consensus to do something now.

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WHAT IS THE CURRENT PAY FOR PERFORMANCE
ENVIRONMENT?

• There are estimated to be more than 200 Pay for
  Performance initiatives in the U.S. now (across gt
  32 states impacting 1 in 4 Americans in 2005).
• Most Pay for Performance initiatives are in the
  private sector.
• Pay for Performance is now moving rapidly to the
  public sector (CMS demonstration and pilot
  projects).
• Despite the recent proliferation of Pay for
  Performance initiatives, there have been few
  provider driven or provider created programs.

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WHAT IS THE CURRENT PAY FOR PERFORMANCE
ENVIRONMENT?

• 5. In general, local initiatives predominate
  (large employer or payer populations are
  targeted).
• 6. Potential national impact initiatives include
  Bridges To Excellence and the Leapfrog Hospital
  Rewards Program.
• 7. Stakeholders in Pay for Performance are
  clinical data poor (insurers) or data rich but
  unable to effectively mine or extract data
  (physicians, hospitals and employers).

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WHAT IS THE CURRENT PAY FOR PERFORMANCE
ENVIRONMENT?

• Physicians and group practices are presently the
  most likely targets or participants.
• Physician successes are generally limited to
  group practices
• Little national experience with ambulatory
  measures and ambulatory I.T. systems.
• Incentives to physician groups are distributed
  equally regardless of individual performance.
• Much less government regulation of physician
  groups as compared to institutional providers.

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WHAT IS THE CURRENT PAY FOR PERFORMANCE
ENVIRONMENT?

• 10. There are significant concerns that
  incentives among and within stakeholders may not
  be aligned
• Providers view quality care as a long term event
  and an individual by individual commitment
  insurers actuarialize over short time frames and
  large populations.
• Physicians and institutions may not have any
  joint financial incentives or connections in the
  absence of capitation or PHOs.
• Stark law concerns.
• Incentives may be completely misaligned (e.g.
  Disease Management for C.H.F).
• Reduced hospital admissions and revenues.
• Insurers and pharmaceuticals do well.
• MDs may have reduced revenues.
• Patients have not been incented or held
  accountable for their own health

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WHAT IS THE CURRENT PAY FOR PERFORMANCE
ENVIRONMENT

• 11. There are ethical concerns about Pay for
  Performance
• Promotion of selection of the fittest.
• Getting rewarded for what you should be doing
  anyway/acknowledging performance has not been
  maximal.
• Submission and auditing of data.

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WHAT IS THE CURRENT PAY FOR PERFORMANCE
ENVIRONMENT?

• Increasing emphasis will be placed on wellness
  and maintenance of health. The healthcare
  industry is ill-prepared for these systematic
  changes.
• Poor data about healthcare status and
  disparities.
• Little experience in incenting patients to
  embrace preventative measures.
• Creative models need to be developed with payors
  and employers.

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ISSUES IN PAY FOR PERFORMANCEWHY WILL
PROVIDERS EMBRACE PAY FOR PERFORMANCE?

• They may have no choice!!! The horse is out of
  the barn.
• Providers accept that we are in a new era of
  consumerism/transparency.
• With appropriate measures and programs, Pay for
  Performance promotes evidence based medicine.
• Financial bonuses can support other quality
  initiatives/ providers are collecting and
  evaluating data under a number of different
  initiatives.
• Sensitivity to community perceptions dont
  oppose credible efforts to improve quality.
• Provider/payer/employer alliances can help drive
  national health policy agenda.
• Providers find current insurance products
  difficult to work with and manage.
• Medicare will drive the agenda

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ISSUES IN PAY FOR PERFORMANCEWHERE ARE THE
PURCHASERS?

• Purchasers are concerned about continued cost
  inflation and the ramifications of this on their
  competitiveness/survival.
• Purchasers are confused about the proliferation
  of report cards and how to interpret them.
• Purchasers are often focused on satisfaction as
  a proxy for quality.
• With the dismantling of corporate medical
  director offices, purchasers expect to use health
  care plans as agents of change.
• Coalitions are now forming of purchasers, plans
  and providers.
• Purchasers are increasingly looking at self
  insurance models with some risk passed to
  providers.
• Purchasers find the current products and product
  designs undecipherable.

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ISSUES IN PAY FOR PERFORMANCEWHAT ARE PAYERS
CONCERNS?

• Steadily rising healthcare costs which are
  passed on to purchasers current products may
  be unmarketable and unaffordable.
• Industry inability to have produced successful
  differentiating products.
• Following the failure of most capitated plans,
  providers reluctance to accept risk.
• Consumer demands to prove commitment to quality
  improvement.

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PAY FOR PERFORMANCERESPONDING TO PAY FOR
PERFORMANCEINSTITUTIONAL READINESS

• 1) Invest in I.T. EHR will be particularly
  critical.
• 2) Align organizational priorities with Pay for
  Performance expectations.
• Board, administrative, clinical leadership and
  community education
• Create actionable dashboard
• Develop improvement plans
• 3) Consider development of efficiency measures
  (Wennberg)
• Episodic
• Longitudinal
• Develop partnerships to address issues of chronic
  care/non acute care/preventive care
• Among providers
• Among payers and providers
• With government
• With CBOs
• With patients

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PAY FOR PERFORMANCESUMMARY ISSUES

• This is the time to prepare for these
  initiatives.
• Pay for Performance can require significant
  resources I.T., Medical Directors, Quality
  Officers, Patient Navigators, significant
  management oversight, etc.
• Measures or programs should be chosen carefully.
• Easy to measure and credible.
• Appropriate to populations and demographies
  served.
• Consistent with other QA/regulatory processes and
  initiatives.
• Consistent with evidence based medicine.
• Lend themselves to behavioral and outcome
  changes.
• Limited in numbers.
• Financially relevant.
• Have useful life of several years.

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PAY FOR PERFORMANCESUMMARY ISSUES

• Pay for Performance should not be a proxy for
  quality re-engineering a broad based approach
  to quality needs to mounted.
• To address the challenges of improving quality,
  the healthcare community needs
• Collaboration, not competition.
• Local and regional collaboration.
• Meaningful national initiatives.
• Capital.
• Industry wide pressure for better I.T. systems.
• Preparation for increased communication.
• Partnership to address public health challenges
• Access.
• Lack of healthcare insurance.
• Obesity.
• Smoking.
• Emergency preparedness.
• Patient accountability.

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PAY FOR PERFORMANCEEXAMPLES OF CURRENT PROGRAMS

• Most programs address high volume/high acuity
  clinical areas
• Heart attack.
• Coronary artery bypass.
• Heart failure.
• Community acquired pneumonia.
• Surgical infections.
• Joint replacements.
• Diabetes.

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PAY FOR PERFORMANCEEXAMPLES OF CURRENT PROGRAMS

• Programs are based on reporting of
  indicators/processes (Pay for Reporting) or
  Disease Management.
• Disease Management programs (Medical Home) will
  likely predominate in the future. These will
  address outcomes/efficiency.
• Insurers are now more amenable to provider
  designed and customized programs.

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PAY FOR PERFORMANCEEXAMPLES OF CURRENT PROGRAMS

• CMS
• NY-Presbyterian Health System
• Geissinger

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PAY FOR PERFORMANCEEXAMPLES OF CURRENT PROGRAMS

• Presidents Executive Order of August 22, 2006
• Four cornerstones of value-driven purchasing
• Commit to use interoperable IT
• Measure and publish quality/information
• Measure and publish price information
• Provide incentives for quality and efficiency.
• Use of more personalized messaging and tools.