Improving Health Care Quality: ValueBased Purchasing in Medicare

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Improving Health Care QualityValue-Based
Purchasing in Medicare
Health Team
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Current System Unsustainable Health Care Costs

• America pays more per capita for health care than
  any other developed nation
• 1.8 trillion on health care
• 15.6 of the Gross Domestic Product (GDP)
• Spending increasing 8.2 a year 2.5 faster
  than incomes and like to continue
• Aging population
• More incidence of chronic illnesses
• Expensive new technologies

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Current System Quality and Efficiency

• Yet we rank 37th in health care quality
• Americans receive recommended health care only 55
  percent of the time
• 100,000 patients die each year as a result of
  medical errors
• More care is not necessarily better care
• Inefficient resource use represents over 30
  percent of U.S. health care spending

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The Bottom Line

• High Spending
• High Value
• High Quality

We are getting minimal value for our health care
dollars!
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What is the Goal?

• Health care that is
• Safe
• Effective
• Patient-centered
• Timely
• Efficient
• Equitable
• --Six aims of quality improvement from Crossing
  the Quality Chasm A New Health System for the
  21st Century, Institute of Medicine (2001)

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What are the Barriers?

• Today, Medicare systems are neutral or negative
  towards quality
• Payment is on a per-service basis, rewarding
  increased volume, even if that service is
  inefficient or ineffective
• Emphasis is on treatment not prevention
• No rewards for activities that support high
  quality care (i.e., HIT, patient education,
  mid-level providers)
• Costs of quality improvement paid by providers,
  yet savings accrue to insurers

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How Can the Goal be Achieved?

• Private and public purchasers should examine
  their current payment methods to remove barriers
  that impede quality improvement and to build in
  stronger incentives for quality enhancement
• Institute of Medicine Recommendation

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Medicare Must Lead Efforts to Improve Quality

• Largest single purchaser of health care
• Yet, no differentiation in payment for outcomes,
  quality, or efficiency
• Many opportunities to better manage care,
  especially for elderly and chronically ill
• When Medicare leads, others follow PPS, RBRVS,
  DRGs

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Current Initiatives in Medicare

• Hospital Quality Initiative
• Beginning 2005, linked a portion of Medicare
  payment to reporting of quality data
• Various BIPA and MMA demonstration projects for
  physicians
• Physician Group Practice Demo
• Medicare Care Management Performance Demo
• Medicare Health Care Quality Demo
• Chronic Care Improvement Program
• ESRD Case Mix Demo
• Other CMS initiatives Premier demo for
  hospitals, disease management for chronically ill

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Good First Step

• But need a comprehensive approach
• And payment should be linked not just to
  reporting of data, but for performance on data
  collected

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Key Objective

• IMPROVE
• Create Incentives for Medicare Providers to
  Return Optimal Value and Excellence

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Scope

• Acute-care hospitals
• Physicians and practitioners
• Medicare Advantage plans
• Home health care
• End-stage renal dialysis centers
• Skilled nursing facilities

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Key Elements

• Consensus-driven measures
• Voluntary reporting
• But reporting linked to payment update
• Quality Pool created consisting of 1.0 2.0
  percent of Medicare payments
• Pool redistributed based on quality improvement
  obtainment of performance thresholds
• Data publicly reported
• Incentives to adopt health information technology

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Framework

• First Stage Payment for reporting of quality
  measures
• If choose not to report than reduced payment
  update
• Second StagePayment for performance on quality
  measures
• Quality Pool created with funds redistributed
  to high performers and improvers

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Hospitals

• Continue paying for reporting of measures
• In 2007, create quality pool
• Payments redistributed based on quality
  improvement and quality performance
• Rural / low volume issues
• Requires creation of rurally relevant measures
  by Jan. 2008.
• Allows Secretary to vary measures used based on
  hospital size and scope
• MedPAC study and CMS demonstration for critical
  access hospitals

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Physicians and Non-Physicians

• In 2007, pay for the reporting of measures
• Provide reports to physicians on utilization of
  items and services
• In 2008, create quality pool and begin paying
  for performance and efficiency
• Rural issues
• Include demonstration project on use of health IT
  in rural areas

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Medicare Advantage

• Plans required to collect and report measures
  currently
• Capitated payment, physician networks, and care
  management programs promote coordination of care
• In 2006, new plan types and payment system per
  the Medicare Modernization Act of 2003
• In 2009, quality pool created
• Plans must report 2 years of data to be eligible
  for payment from quality pool
• Additional payments could spur further
  investments to promote quality, reduce
  cost-sharing

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Other Providers

• End-stage renal disease (ESRD) facilities
• Value-based purchasing in 2007 for all
  facilities, even those participating in the
  bundled payment demonstration project
• MedPAC study on pediatric facilities
• Home health agencies
• Payment for reporting of measures, including
  process measures, in 2007
• Value-based purchasing in 2008
• To some extent, skilled nursing facilities (SNFs)
• Further study on appropriate measures, payment
  linked to reporting in 2009
• Required reporting in 2007 of functional status
  data

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Additional Provisions

• Provision to address legal barriers to health IT
  adoption
• Study on the true cost value of health care
  services
• MedPAC study on expanding value-based purchasing
  to Medicare Part D
• GAO study on the accuracy of quality data
  reported and evaluated under this program