Pay-for-Performance in the United States Health Care System: An Overview and Recent Findings from...
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Transcript of Pay-for-Performance in the United States Health Care System: An Overview and Recent Findings from...
Pay-for-Performance in the
United States Health Care System:
An Overview and Recent Findings from the
Community Tracking Study
• Definition
• Reasons for Increased Interest in Pay-for-Performance
• Examples of Pay-for-Performance
• Pay-for-Performance at the Market Level – the Community Tracking Study
• The Future of Pay-for-Performance in the United States: Current Debate
OVERVIEW:
DEFINITION
• Pay-for-performance is:“The use of incentives to encourage and reinforce the delivery of evidence-based practices and health system transformation that promote better outcomes as efficiently as possible”
American Healthways, 2005 as quoted in Forrest, Villagra and Pope, American Journal of Managed Care, February, 2006
“Pay-for-performance represents the next great hope- or, in skeptics’ eyes, hype – for reforming the U.S. health system”
Adler, Benefit News.com, October, 2005
Reasons for Increased Interest in Pay-for-Performance in the United States
*Managed Care “Backlash” (1993-1997)
*Decline in reliance on capitation
payments due to:־ concern over incentives to withhold care־ shift in bargaining power between
health plans and providers due to provider consolidation
Physician Pushback
Halverson: “…pricing power has shifted back
to the consolidated, locally dominant
providers, which are doing with that power
exactly what we might expect: raising fees”
Strunk, et al: “…financial pressures, coupled
with greater sophistication in managed care
contracting strategies and tactics, have spelled
the end of a period when some providers
uncritically accepted contract terms…providers
are testing the waters to see just how far they
can push their emerging bargaining power.”
Reasons for Increased Interest in Pay-for-Performance in the United States continued
• Institute of Medicine Spotlights Quality and Safety problems (1997-2000)– The IOM “To Err Is Human…” report underscored
system failures that expose patients to unnecessary risks
– The IOM “Crossing the Quality Chasm…” report and follow-up studies highlighted areas where current approaches to treatment are inadequate and substantial improvements in care are warranted; identified misaligned financial incentives as important cause of quality deficiencies
– Quality deficiencies reinforced by McGlynn, et al. NEJM and Health Affairs articles
• Rising health insurance costs cause employers to search for new strategies to manage health care benefits
• Pay-for-performance endorsed by highly visible national employers:
“Pay-for-performance is here to stay. It will evolve and change over time, but already we know that it is working and we see that quality is improving. So to retreat to the previous system makes no sense to anyone. There is no turning back.”
Francois de Brantes, program leader for healthcare initiatives with
G.E. Corporate Healthcare and Medical Services Programs, quoted in Conklin and Weiss, Thomson-Medstat, 2005
Reasons for Increased Interest in Pay-for-Performance in the United States continued
Year 2002 Performance Disclosure• Comparisons of hospitals, physicians and
pharmaceuticals
Consumerism and Pay-for-Performance• Market sensitivity to hospital and physician
performance
Chasm Crossing• Clinical re-engineering by physicians and hospitals
Year 2012 Improvement• 50 percentage points improvement in quality
measures• 40 percentage point reduction in cost increases
_____________Source: Adapted from A. Milstein, MD, 2004
Key Evolutionary StepsA Benefit Consultant Perspective
Reasons for Increased Interest in Pay-for-Performance in the United States continued
• Improvement in information technology
(1995 – present)
-Growing implementation of the electronic
medical record
-HIPAA and the standardization of reporting
cost and use of services
Reasons for Increased Interest in Pay-for-Performance in the United States continued
• Rhetoric of Health Care Crisis
:Broder, Washington Post ־
“The American Health Care System is urgently in need of being overhauled”
Senator Frist (R. Tennessee) ־
The “…status quo of health care delivery is
unacceptable today” and the health care sector needs
to be “radically transformed”
- Medicare budget pressures
CMS• Requires hospitals that participate in Medicare to report
selected performance data to qualify for full payment; .4% penalty for non-reporting
• 98% of Medicare hospitals report
Integrated Healthcare Association’s P4P Initiative (California)
• 6 plans, over 200 physician groups, 7 million commercial HMO enrollees
• Standardized performance data and public report cards• Total payouts to high ranking groups will be $40 million to
$100 million
Pay-for-Performance: U.S. Examples(from 100+)
U.S. Examples
Bridges to Excellence• Physicians who earn recognition via NCQA
programs receive annual incentive payments of $50-$100 per employee or family member of participating employers
• Rollout sites: Louisville, Cincinnati, Albany, Massachusetts
• Major employers: GE, Raytheon, Proctor and Gamble, Verizon, UPS, Ford
Pacific Care Health Systems:
• In 2003, PacifiCare contracted with 300 large multispecialty physician organizations in California with groups providing care to an average of 10,000 enrollees each
• PacifiCare had measured performance of groups on quality since 1993 and first made the information public in 1998
• New quality improvement program based on a subset of measures was announced in 2002 to become effective in 2003 contracts
• 163 groups had enough PacifiCare patients to be eligible for the program
KEY COMPONENTS OF THE PROGRAM• Performance targets set at 75th percentile of 2002
average performance of groups• Groups received a bonus of 23 cents PMPM for each
target met or exceeded• Overall, groups with 10,000 PacifiCare enrollees could
receive $270,000 annually for perfect performance– This was about 5% of the professional capitation paid by
PacifiCare to average group and 0.8% of overall group revenue
• Performance assessed on rolling year of data and payments made quarterly
• Groups anticipated that other plans soon would implement similar programs
Pacific Care Health Systems continued
OUTCOMES• Improvement occurred in all three quality measures
studied but this also was true for PacifiCare provider groups in a comparison area (Pacific Northwest)– For only one measure, there was a significant
difference in the rate of improvement• In the first year, PacifiCare awarded $3.4 million out of
$12.9 million in potential bonus payments• 60% of groups received payments initially and this
increased to 75% after one year; only 14 groups received payment for 5 or more (out of ten) measures
• High performing groups, prior to the program, received most of the bonus money but improved the least
__________Source: Rosenthal, JAMA, October 12, 2005
Pacific Care Health Systems continued
Pay-for-Performance at the Market Level – The Community Tracking Study
• Background– Goal of CTS: Better understanding of how health systems
change over time at the community level and how market-specific factors influence change across different communities
– Design:• 12 randomly selected communities (1996)• Surveys of providers and consumers• Site visits for collection of interview data every two years
– Most recent site visits:• January – June 2005• Over 1,000 interviews using structured protocols• Representatives of provider organizations, health plans,
large employers, third party administrators, benefit consultants, health insurance brokers
• Multiple interviews with the three largest health plans in each community
– Funding: The Robert Wood Johnson Foundation
(Principal) Employer
(Agent) Health Plan (Principal)
(Principal) Medical Group (Agent)
(Agent) Physician
Pay-for-Performance at the Market Level – The Community Tracking Study
• Employers– Local benefit managers had limited interest in health
plan pay-for-performance efforts• Saw these efforts as a normal part of “network maintenance”• More focused on shifting costs to consumers, implementing
disease management and wellness programs
– Benefit managers who were aware of pay-for-performance efforts were often skeptical
– Some employer involvement in community efforts to encourage collaboration among plans in defining performance measures (eq Phoenix, Seattle)
Pay-for-Performance at the Market Level – The Community Tracking Study (continued)
• Health Plans– 27 of 34 Plans had pay-for-performance programs,
pilot efforts or planning stage efforts– Plans not developing pay-for-performance initiatives:
• Were focusing instead on changing consumer behavior
• Didn’t have resources necessary to mount program
• Were waiting for direction from corporate offices
Pay-for-Performance at the Market Level – The Community Tracking Study (continued)
• Health Plans (continued)
– Broad range of measures in use, including many that are efficiency-related
– Local market relations between providers and plans shape pay-for-performance implementation
– Money at stake ranges from small to substantial sums• Miami plan: $4,000 per physician is average award with
maximum award of $12,000• Growing consensus that plans need to have at least 10% of
provider compensation tied to pay-for-performance to get a response
– Substantial variation across programs in percent of providers receiving bonuses
– Few plans risk adjust or have a strategy for evaluating impact
Pay-for-Performance at the Market Level – The Community Tracking Study (continued)
• Providers– Gaining provider acceptance of pay-for-performance
is major health plan challenge– Providers voice support in theory but negotiating
details has gone slowly– Local plans have emphasized a collaborative
approach– Provider concerns include:
• Choice of measures• Administrative burden• In-consistencies across health plan approaches• Sample size on which measures are calculated (for
physicians)
Pay-for-Performance at the Market Level – The Community Tracking Study (continued)
• Providers continued
– Communities where most physicians practice in organized medical groups are further along in implementing pay-for-performance for physicians
– Orange County• Integrated Health Care Association has developed pay-for-performance for
HMO patients• California Blue Cross has developed pay-for-performance for its PPO
patients• Health plans’ pay-for-performance money is added to medical group bonus
pools for physicians with distribution to frontline physicians being highly variable
– Boston• The three largest plans include Pay-for-performance in physician contracts• About half of pay-for-performance dollars reward cost containment• Frontline physician awareness of pay-for-performance is minima\• New money or “withheld” dollars?
Pay-for-Performance at the Market Level – The Community Tracking Study (continued)
• Summary– Implementation of pay-for-performance is highly
variable across communities depending on local market characteristics
– No consensus has emerged on key issues:• Measures to be used• Dollars needed to stimulate behavior change
– Medical groups play an important role in implementation of physician pay-for-performance programs and their subsequent impact
– Disconnect between public support expressed for pay-for-performance by large, national employers and awareness and support on part of local employers
– Pay-for-performance further along for hospitals than physicians
– Evaluation of effectiveness is generally missing
The Future if Pay-for-Performance in the United States: Current Debate• Standardization of measures at the national level
versus negotiated solutions at the local level• The role of organized medicine
– AMA “pact” with Congress on Medicare pay-for-performance
– specialty society response
• Medicare support for pay-for-performance – de-facto standardization? -- will health plans mimic Medicare?