History and Future Outlooks for
Hospital P4P
Richard A. Norling
President and CEO
Premier Inc.
Bringing Nationwide Knowledge to Improve Local
Healthcare
Local healthcare
Shared goals:
Better outcomes
Safely reducing cost
Owners
National alliance
Affiliates
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•
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•
•
•
•
Owned by 200 not-for-profit hospitals and health systems
Serving more than 2,100 hospitals and 54,000 other providers
Sharing of clinical, labor and supply chain data for benchmarking
$33 billion in group purchasing volume – largest in U.S.
Highest ethical standards - leading Code of Conduct
Diversity, safety and environmental programs
Recipient of 2006 Malcolm Baldrige National Quality Award
Overview of Premier/CMS P4P project
Premier is leading the first national CMS pay-for-performance demonstration
for hospitals. More than 260 Premier hospitals participate voluntarily.
Hypothesis
Financial incentives / transparency improve hospital quality & performance
Findings
• Financial incentives did focus hospital executive attention on measuring
and improving quality.
• Hospitals performance has improved continuously over time.
Hospital Quality Incentive Demonstration (HQID)
Key Facts
•
Three year demo (2003-2006); extended for three additional years through Oct. 2009
•
250 hospitals in 37 states
•
Quality measures
– First 3 years: 33 nationally recognized measures in five clinical conditions:
•
•
•
•
•
Heart attack (Acute myocardial infarction (AMI))
Heart bypass surgery (Coronary artery bypass graft (CABG))
Heart failure (HF)
Community acquired pneumonia (PN)
Hip and knee replacement surgery (Hip/Knee)
– Second three years: 41 nationally recognized measures in multiple clinical conditions
•
Financial incentives
– First three years: Top 2 deciles in each condition rewarded; Penalties for hospitals still in
the bottom 2 deciles in each condition (set in year 2)
– Second three years: Awards paid for threshold attainment, most improvement, and top
performer; similar penalty methodology
More Patients Are Reliably Receiving Evidenced-based
Care
Evidence-based Care Improvements
Avg. improvement from
4Q03 to 2Q08 in all
clinical areas
(19 quarters)
55.05%
CMS/Premier HQID Project Participants Appropriate Care Score:
Trend of Quarterly Median (5th Decile) by Clinical Focus Area
October 1, 2003 - June 30, 2008 (Year 1, 2, and 3 Final Data; Year 4 and 5 Preliminary)
Pneumonia
65.1%
Heart Failure
54.9%
Hip & Knee
20%
10%
86.9%
89.3%
92.9%
76.7%
84.0%
84.0%
53.6%
63.6%
72.1%
78.6%
81.3%
85.7%
85.9%
89.5%
87.1%
90.0%
86.4%
86.2%
87.0%
85.5%
87.9%
89.7%
82.6%
82.8%
87.0%
87.0%
77.1%
82.7%
87.4%
70.3%
93.5%
93.8%
94.4%
30%
27.8%
34.1%
41.2%
66.5%
40%
34.7%
43.6%
50.0%
53.8%
58.5%
62.6%
64.6%
68.0%
72.3%
75.8%
78.1%
78.3%
79.2%
82.5%
85.2%
86.0%
CABG
50%
22.3%
28.0%
34.7%
39.0%
43.8%
44.3%
50.7%
53.8%
60.9%
62.8%
67.6%
23.7%
60%
45.8%
48.7%
(percentage points)
70%
30.0%
34.1%
AMI
Improvement
Appropriate Care Score
Clinical
Area
68.5%
77.3%
82.9%
84.2%
86.6%
91.9%
93.3%
91.7%
91.7%
93.3%
94.1%
95.5%
80%
70.7%
72.7%
75.7%
80.0%
80.9%
80.6%
85.0%
87.0%
87.8%
88.2%
89.6%
88.6%
90.0%
90.0%
92.1%
92.8%
90%
92.7%
96.0%
96.5%
100%
0%
AMI
CABG
PN
HF
Hip and Knee
SCIP
Clinical Focus Area
65.1%
4Q03
1Q04
1Q08
2Q08
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
Dramatic and Sustained Improvement
CMS HQID Composite Quality Score
Avg. improvement
across all 5 clinical
areas for median CQS
(19 quarters)
18.66%
Heart Failure
Hip & Knee
31.4%
13.0%
65%
98%
97.9%
98.0%
98.1%
97.4%
97.46%
98.16%
92.3%
94.11%
95.27%
85.1%
86.7%
88.7%
90.9%
91.6%
93.4%
95.2%
95.92%
96.6%
97.1%
97.8%
97.9%
90%
91.6%
93.2%
93.4%
94.2%
94.90%
95.38%
92%
92.4%
93.5%
93.4%
94.2%
94.85%
95.90%
98%
97.7%
97.8%
98.4%
98.5%
99.01%
99.19%
97%
97.0%
97.6%
97.5%
98.3%
98.27%
98.54%
70%
73.1%
76.1%
78.2%
81.6%
83.0%
84.38%
86.7%
88.8%
90.0%
89.9%
25.9%
75%
68.1%
Pneumonia
80%
64.0%
14.1%
85%
78.1%
80.0%
82.5%
82.7%
84.8%
86.30%
88.5%
89.3%
90.1%
91.4%
CABG
90%
70.0%
73.1%
8.9%
95%
89.6%
90.0%
91.5%
92.5%
93.5%
93.4%
95.1%
95.77%
96.0%
96.1%
96.8%
96.8%
(percentage points)
100%
85.1%
85.9%
89.4%
90.6%
93.7%
94.9%
96.2%
97.01%
96.8%
98.3%
98.4%
98.4%
AMI
Improvement
October 1, 2003 - June 30, 2008 (Years 1, 2, & 3 Final Data; Years 4 and 5 Preliminary Data)
HQID Composite Quality Score
Clinical
Area
CMS/Premier HQID Project Participants Composite Quality Score:
Trend of Quarterly Median (5th Decile) by Clinical Focus Area
60%
55%
AMI
CABG
Pneumonia
Heart Failure
Hip and Knee
SCIP
Clinical Focus Area
4Q03
1Q04
1Q08
2Q08
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
In Broader Comparison, HQID Hospitals Excel
National Leaders in Quality Performance
• HQID participants avg. 6.5%
higher than Non-Participants
HQID hospitals have higher quality ratings* than national hospitals overall
*CMS process score
• Avg. improvement for HQID
participants = 7.8%
• Avg. improvement for Nonparticipants = 5.6%
 New England Journal of
Medicine publication by
Lindenauer et al. (February
2007) found that hospitals
engaged in P4P achieved
quality scores 2.6 to 4.1
percentage points above
other hospitals due solely to
the impact of P4P incentives.
A composite of 19 measures shared in common between HQID and Hospital
Compare shows P4P hospitals performing above the nation as a whole
Premier Performance Pays Research
Premier’s Performance Pays study demonstrated that when evidencebased care is reliably delivered, quality is higher and costs are lower.
The recently updated study using all payors and three years of data
(over 1.1 million patients), confirms this result.
Study finds higher reliable care yields lower
mortality rates for heart bypass surgery patients
Study finds higher reliable care yields lower
hospital costs for patients with pneumonia
Mortality Rate for CABG Patients (%)
Average Hospital Costs
Mortality Rate (%)
6%
Hospital Costs for Pneumonia Patients
4%
2%
0%
0 to 49%
50 to 74%
Patient Process Measure
75-100%
10,000
8,000
6,000
0 to 50%
51 to 99%
Patient Process Measure
100%
Improvement and Savings Over Three Years
Avg. cost improvement per
patient across all clinical areas
Avg. improvement in mortality
across four clinical areas
$1,063
1.87%
Clinical Area
Starting
Score
Ending
Score
Improvement
$1,579
Heart Attack
8.86%
6.59%
2.27%
$811
Heart Bypass
Surgery
2.51%
1.55%
0.95%
Pneumonia
9.28%
6.89%
2.39%
Heart Failure
4.84%
2.99%
1.86%
Clinical Area
Improvement
Heart Attack
$1,599
Heart Bypass
Surgery
Pneumonia
Heart Failure
$1,181
Hip Replacement
$744
Knee Replacement
$463
If all hospitals in the nation were to achieve this
improvement, the estimated cost savings would be greater than
$4.5 billion annually with estimated 70,000 lives saved per year
International Portability of P4P
UK North West “Advancing Quality”
Program
England’s largest health authority using
Premier/Medicare P4P project as a model
for improving patient care
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–
–
–
40 hospitals across the NW region
Measured in five clinical areas
Program initiated on Oct 1
Expected savings = £17M each year in
reduced LOS, re-admissions
Overview of Advancing Quality
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Value creation is the objective
Measurement is systematic
Measurement supports the objective
Sound logic underlies each performance measure
Selection of measures unambiguous
A measurement culture exists
Clear rationale for incentive compensation
Management encourages open communication of results
Measurement system is simple to use
Measures processes (inputs) and outcomes
Next-Generation of P4P is QUEST: A Focus on Quality,
Efficiency, Safety, with Transparency
• A collaborative of more than 160 hospitals treating approximately 2.3
million patients annually, QUEST is designed to help springboard
hospitals to a new level of performance.
• QUEST is not theory and rhetoric. It’s about benchmarking,
implementing, measuring and scaling innovative solutions to the
complex task of caring for patients.
• QUEST’s multidimensional approach is unlike any other attempted.
• QUEST represents a promise for measurable improvements in quality,
safety and cost of care for patients and shared results to benefit all in
healthcare.
Optimizing Quality, Efficiency and Safety:
Moving to High Performance Healthcare Delivery
QUEST Advisory Panel
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14
Agency for Healthcare Research and
Quality (AHRQ)
Alliance for Nursing Informatics,
University of Minnesota
American Board of Internal Medicine
American College of Surgeons
American Health Information
Management Association
American Heart Association
American Hospital Association
American Society for Healthcare Risk
Management (ASHRM)
Blue Cross Blue Shield Association
(BCBSA)
Centers for Disease Control and
Prevention (CDC)
Centers for Medicare & Medicaid
Services (CMS)
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Institute for Healthcare Improvement
(IHI)
International Center for Nursing
Leadership University of Minnesota
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John D. Stoeckle Center for Primary
Care Innovation, Massachusetts
General Hospital
National Business Coalition on Health
National Patient Safety Foundation
(NPSF)
National Quality Forum
Office of the National Coordinator for
Health Information Technology
The Commonwealth Fund
The Joint Commission
The Rand Corporation
Aggressive, Three-Year Improvement Goals
• Save Lives – Achieve a mortality rate that is 17 percent
less than expected.
• Improve efficiency – Reduce inpatient costs below the
mid point among participating hospitals.
• Deliver the most reliable and effective care – Deliver
every recommended evidence-based care measure for
each patient.
• Improve patient safety (year 2 measure) – Prevent
incidents of harm in more than 20 categories, including
healthcare-acquired infections and birth injuries.
• Increase Satisfaction (year 2 measure) – Dramatically
improve the patient care experience.
QUEST Analysis
• If all QUEST hospitals attained the project’s quality goals
over the three-year period:
– Patient mortality could be reduced by 17 percent, or 8,628 lives
saved a year;
– Reliability of care could improve by nearly 13 percent, or 22,364
more patients receiving all evidence-based appropriate care a year.
QUEST Mortality Goal: Move Hospitals over
the Top Performance Threshold (O/E = 0.82)
-10
Distribution of QUEST Hospitals on Observed vs. Expected Mortality Ratio
Distribution
of QUEST
Hospitals
vs. Expected
Mortality Ratio
Baseline
Julyon1,Observed
2006
through
June
-8
-6
-4Period: -2
0
2
4 30, 2007
6
8
0.25
0.50
Top Performance
Threshold: 0.82
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
*This Distribution Graph shows the range of variation for the Mortality Ratio of the QUEST charter members. Each dot represents one hospital. The
plotted values are based on rounded values.
10
Our Mortality Measure and Potential Components
QUEST Baseline Performance Result
Evidence-Based Care (TPT 84%)
100%
90%
80%
70%
60%
50%
40%
30%
Distribution of QUEST Hospitals on Evidence-Based Care Rates
All-or-None Composite Score
Top Performance
Threshold: 84%
Our Evidence Based Care Performance Measure: “All or
Nothing Score”
QUEST Baseline: Distribution of Hospitals on Total
Inpatient Cost per Case Mix Adjusted Discharge
-10
$2,000
T
E
A
C
H
I
N
G
N
O
N
T
E
A
C
H
I
N
G
-8
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge
Teaching
-6
-4
-2 and 375 beds
0 or more2
4
6
> 375 Beds +
8
10
Top Performance
Threshold: $6,520
$3,000
-10
$2,000
$4,000
$5,000
$5,000
$6,000
$6,000
$7,000
$7,000
$8,000
$8,000
$9,000
$9,000
$10,000
$10,000
$11,000
$11,000
$12,000
$12,000
$3,000
-8
> 175 Beds +
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge
and 1750beds or more
-6
-4 Non- teaching
-2
2
4
6
8
Top Performance
Threshold: $5,550
10
-10
$2,000
< 375 Beds -
$4,000
$5,000
$5,000
$6,000
$6,000
$7,000
$7,000
$8,000
$8,000
$9,000
$9,000
$10,000
$10,000
$11,000
$11,000
8
10
Top Performance
Threshold: $5,570
-8
< 175 Beds -
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge
-6
-4 Non- teaching
-2 and less0than 175 beds
2
4
6
$3,000
$4,000
$12,000
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge
-6
-4 Teaching
-2 and less than
0 375 beds2
4
6
$3,000
$4,000
-10
$2,000
-8
$12,000
Baseline Period: July 1, 2006 through June 30, 2007
8
Top Performance
Threshold: $5,460
10
Our Efficiency Measure (Cost of Care) and Components
Our Harm Measure and Potential Components
Patient Experience: Global Measure Composite
Score
100.00%
Distribution of HCAHPS Top Box Global Measures Composite Score
QUEST Hospital Compare Facilities
3Q06 - 2Q07
Top Quartile
Threshold: 72%
Mean: 68%
Std. Dev: 6.2%
N = 124
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
-10
-8
-6
-4
-2
0
2
4
6
8
10
Our Patient Experience Measure and Potential
Components
QUEST Participants Show Improvement Through Second
Quarter 2008 (Preliminary Results)
• 7.98% increase in avg EBC Rate of
participants from baseline to preliminary
1q08-2q08 data
• $297 decrease in the avg Cost of Care for
participants from baseline to preliminary
1q08-2q08 data
100%
80%
60%
77.57%
83.81%
85.55%
Final 1q08 (N=158)
Preliminary 1q08-2q08 (N
=149 )
40%
20%
0%
Baseline (N=153)
Trend of Average Observed to Expected Mortality
Ratio for QUEST Participants
Baseline and 1q08 Final Data; 2q08 Preliminary Data
Baseline and 1q08 Final Data; 2q08 Preliminary Data
$5,831
$5,585
$5,534
$5,000
$4,500
$4,000
Baseline (N=162)
Preliminary 1q08 (N=155) Preliminary 1q08-2q08 (N
=139 )
Observed to Expected
Mortality Ratio
Cost of Care ($)
Baseline and 1q08 Final Data; 2q08 Preliminary Data
Trend of Average Cost of Care
for QUEST Participants
$6,000
$5,500
Evidence Based Care Rate (%)
• 0.11 reduction in the avg Observed to
Expected Mortality Ratio among
participants from baseline to
preliminary 1q08-2q08 data
Trend of Average Evidence Based Care Rate
for QUEST Participants
1.50
1.25
1.00
0.75
0.50
0.25
0.00
0.99
Baseline (N=160)
0.93
0.88
Preliminary 1q08 (N=158) Preliminary 1q08-2q08 (N
= 157)
Observations on Collaborative Execution
• Transparency and Healthy Competition is Key
– Everyone likes being held up as a best performer; no one wants to see
their institution at the bottom of the list
• Trust in each other and in a partner are critical
– Data must be credible – not perfect
– Since the group is entirely open with results, both good and bad, there
needs to be a trust that information won’t be misused
• Focusing on a “higher purpose” can excite and motivate and makes
competitive concerns less important
– By constantly focusing on the improved health of the patient and the
community, the group engages in true collaboration
• All change is local but some problems are universal
– We have found a small number of “usual suspects” account for many of
the avoidable deaths in the population
– Finding best performers in these problem areas can uncover success
strategies that can be shared among all participants
What to Expect From Washington in 2009
and Beyond
Blair Childs
Senior Vice President,
Public Affairs
Premier Inc.
2007 and 2008 are additional
“building” years for quality:
continuing past work
AQA - HQA Steering
Alliance for Pediatric Committee Formed
Quality launched
Pharmacy
Quality Alliance
launched
Medicare
Deficit Reduction
Modernization Act ties
Act mandates
hospital market
expansion
basket updates to
of measurement
quality reporting for
and sets precedent
10 measures
for lack of add-on
payment for errors
IOM Report
To Err is
Human:
Building a Safer
Health System
JCAHO launches
the core measures
initiative
National
Quality Forum
constituted
IOM Report
Crossing the Quality Chasm
• Focused on a redesign of
health care delivery
• Called for creation of
performance-based
payment
JCAHO
launches
the ORYX
Initiative
CMS Nursing
Home Compare
launched
Premier
Hospital Quality
Incentive Demo
launched
CMS Home
Health
Compare
launched
Creation of
The Leapfrog
Group
Hospital
Quality
Alliance
launched
1990s
AHIC Quality
Workgroup Approved
2000
2001
2002
2003
IOM Report
Performance
Measurement
Accelerating
Improvement
Executive Order
Issued on Promoting
Quality
Hospital
Compare
expanded to
payment and
volume
information
and HCAHPS
patient
experience
data
ValueBased
Purchasing
Report to
Congress on
the Plan to
Implement
a Medicare
Hospital
VBP
Program
CMS
Roadmap
to Quality
launched
Hospital
Compare
launched
Creation of
Bridges to
Excellence
CMS
Preventable
Events
Ambulatory
Quality
Alliance
launched
2004
2005
2006
2007
2008
Value-Based Purchasing
• Twin tools:
– Transparency to facilitate patient awareness and
choice, as well as performance improvement by
providers; and
– Differential payment to further incentivize providers
to change practices, and reduce healthcare spending.
More Quality Measurement
• To get full market basket update for FY 2010:
–
–
–
–
–
(1) Surgical Care Improvement Project (SCIP)
(1) Hospital readmissions
(5) Patient Safety Indicators (AHRQ)
(4) Inpatient Quality Indicators (AHRQ)
(1) Cardiac surgery measure (STS)
• Retires pneumonia oxygenation assessment
• Total of 43 quality measures
– AMI 30-Day Risk Standardized Readmission Measure (Medicare patients)
– Pneumonia 30-Day Risk Standardized Readmission Measure (Medicare
patients)
• AMI 30-Day Risk Standardized Readmission & Pneumonia
30-Day Risk Standardized Readmission Measure
(Medicare patients) in Final Outpatient Rule
Pride or Prejudice,
Payers Driving Transparency
• May 21 ad to promote the
Hospital Compare Web site
• CMS ads in 58 major dailies
• Featured hospitals in each
market and their performance on
two measures (clinical process
measure and HCAHPS
measure)
CMS Publicly Reporting Risk-standardized,
30-day Mortality Measures for AMI, HF and PN
• The August 20, 2008 posting of mortality measures to Hospital Compare is the second
annual posting for AMI and HF mortality and the first public reporting for PN mortality.
• All three measures will be refreshed annually, and hospital-specific reports will be
distributed to all participating hospitals for each annual preview period.
Display of risk-adjusted
hospital 30-day
mortality rates
The number of
eligible cases for
each hospital
An
estimate of
the rate’s
certainty
(also
known as
the interval
estimate)
• CMS is contemplating additional changes for displaying 30-day mortality measures.
Source: CMS Presentation Barry Straube 6/4/2008; Quality Net http://www.qualitynet.org/dcs/ContentServer?cid=1163010398556&pagename=QnetPublic%2FPage%2FQnetTier2&c=
Page; Hospital Compare; Booz Allen Analysis
Hammer: Hospital-acquired Conditions
•
As of October 1, hospitals will not receive higher payment for:
1. Object left in during surgery (acute reaction to foreign substance);
2. Air embolism;
3.
4.
5.
6.
7.
Blood incompatibility;
Catheter-associated urinary tract infections;
Pressure ulcers (Stages III/IV);
Surgical site infections, e.g., Vascular catheter-associated infections;
Mediastinitis after coronary artery bypass graft;
8. Hospital-acquired falls leading to injuries (including fractures, dislocations,
intracranial injury, crushing injury and burns).
9. Venous Thromboembolism after hip and knee replacement*;
10. Poor Glycemic control (Ketoacidosis & Coma- hypoglycemic &
hyporosmolar); and
Hidden Agenda: Government spending on
healthcare is unsustainable – Impact???
Total Federal Spending for Medicare and Medicaid Under Assumptions
About the Health Cost Growth Differential
Percent of GDP
25
Actual
Projection
Tax rates 2050:
10%
26%
25%
66%
35%
92%
Differential of:
2.5 Percentage Points
20
1 Percentage Point
Zero
15
10
5
0
1966
1972
1978
1984
1990
1996
2002
2008
2014
2020
2026
2032
2038
2044
2050
Healthcare spending as a portion of GDP is projected to take the largest one year
climb ever from16.6% in 2008 to 17.6% in 2009.
CMS Actuaries, 2/27/09
Obama FY 2010 Budget proposal
More details in the Spring
•
10-year $1.7 trillion healthcare budget blueprint with few details
– $630 B “reserve fund” to jump-start health reform efforts
– Difference of $1 trillion to fund (more $?; more savings?: deficit?; more taxes?)
•
Savings include hospital payment reform (10-yr savings):
– Hospital P4P programs ($12 billion)
– Bundled payments for inpatient stay and 30-day post-acute care ($17.6B)
– Reduce payments to hospitals with high readmission rates ($8.4B)
•
Other proposals contained in the budget:
– Reform of Medicare physician payment formula, including performance-based
payments for coordinated care
– Address financial conflicts of interest in physician-owned specialty hospitals
– Increase CMS budget to attack fraud, waste and abuse
– Increase Medicaid drug rebate for brand-name drugs from 15.1% to 22.1% of AMP
– Prohibit anticompetitive agreements between brand and generic manufacturers
– $330MM for healthcare providers in medically underserved areas
Rep. Altmire VBP bill – Quality FIRST Act
• Rep. Altmire (D-PA) introduced Quality FIRST Act 9/25/08 (expected to
reintroduce in 111th Congress)
• Incentive payments based on hospitals’ performance on evidencedriven, consensus-based quality measures
– AMI, HF, PN, SCIP (clinical areas to be expanded in subsequent years)
• Hospitals rewarded for attainment of threshold announced 2 years in
advance, as well as for improvement
• Establishes reasonable thresholds based on what all hospitals can
achieve in a realistic timeframe
• Hospitals receive separate scores—and are rewarded—for each
clinical area, rather than one single score for all measures
• Budget neutral, with up to 2% of hospital payments at stake
Baucus-Grassley VBP Bill Discussion Draft
• Senate Finance Committee Chairman Baucus & Ranking Member
Grassley released discussion draft of VBP legislation 11/19/08
• Phased in over 5 yrs, beginning in FY 2012
• Incentive payments based on hospitals’ performance on evidencedriven, consensus-based quality measures
– AMI, HF, PN, SCIP, overall patient satisfaction (clinical areas to be
expanded in subsequent years)
• Hospitals rewarded for attainment of threshold, as well as for
improvement
• HHS to develop methodology of determining performance score that
results in appropriate distribution to all hospitals
• Incentive payment applied to all DRGs after 3-yr transition period
• Budget neutral, with 2% of hospital payments at stake, once fully
phased-in
Thank you
Questions? Comments?
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