Rewarding Provider Performance: Aligning Incentives
in Medicare – IOM, September, 2006
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Key Messages:
• Current payment system is broken and must be fixed
• PFP must be a key factor, but not a “magic bullet”
• Evidence base for PFP is not robust
• PFP should reward quality, efficiency and “patient-centeredness”
• Transparency requirement
• Promote electronic data collection & systems and standardized
measures
Accountability and Quality
National Health Policy Conference
February 12, 2007
• PFP should be phased in by provider via reporting, improvement,
and achievement
• Paid w/ existing funds
Sam Ho, M.D.,
Chief Medical Officer,
Pacific and Southwest Regions
• PFP should be introduced within a learning system
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4 Cornerstones of Value-driven Health Care
Key Questions
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• Issued by DHHS Secretary Leavitt
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• In addition to transparency of provider performance, how
else can accountability be demonstrated?
• Responding to President’s Executive Order, 8/06
• Why pay for reporting, then improvement, then
performance? Or, for all three?
Transparency on Health
Care Quality
Transparency on Price
Incentives for
Providers/Consumers
HIT Standards
• Why pay for quality and efficiency?
• With mixed results to date, what else can be done?
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Standardized Measures
Implications for Health Plans
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•
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Evidence-based, consensus-driven
CMS
AHRQ / NQF
AQA – 26 starter measures, 8 areasÆ93 measures
HQA – 21 measures, 4 areas
Leapfrog – 30 safe practices
BTE/NCQA – 25 measures, 3 areas
ABIM MOC
MDs, MG/IPAs, Hospitals
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• Velocity
• Standardized Measures—focus?
– Transparency measures
– Incentive measures
• Quality and Efficiency
• Multiple units of analyses
• Incentives / disincentives
• High-performance networks
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Overview of PFP Impact Estimates*
Improve Performance & Reduce Variation
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• Rigorous studies of pay-for-performance in health care are
few (17 since 1980)
• Quality Measures
– Virtually all measures only address under-use
• Overall findings are mixed: many null results even for large
dollar amounts
• Efficiency Measures
– Required to address over-use and mis-use
• But in many cases negative findings may be due to shortterm nature of analysis, small incentives
– Required to help mitigate HCC inflation
– Urgency emphasized by CMS, employers, consumers
• Evidence suggests pay-for-performance can work but also
can fail
* Research reviewed by M. Rosenthal, PhD, Harvard School of Public Health
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California IHA Program Results
2005-2006 PHS Quality Incentive Program
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• Amongst providers, +10% in IHA clinical measures and
+2.7% in PAS since 2003
• 28 QUALITY INDEX® profile of provider organization measures
• 4 QUALITY
Leapfrog
INDEX®
profile of hospital measures, including
• Yet 75% of health plan measures < national 50%ile HEDIS
• Incentive payments total over $140 million from 2004-2006
INDEX®
• All measures derived from QUALITY
profile results (PC
claims, encounter, CSS, OSHPD, MedPAR, PEP-C, Leapfrog
and PAS)
• Single public report card through state agency in
2004/2005 and self-published in 2006
• MY2005: thresholds at 80th and 90th percentile with absolute
targets established in the previous measurement year
75th
• MY2006: relative threshold at
payout calculation (IHA method)
and
85th
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• Successful collaboration amongst purchasers, plans and
providers
percentile upon the
• For MY2005, 18 of 21 measures improved on an average of 10%
• Incentive pool = $36M for ’05 and ‘06
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• Direct incentives
– IOM health care aims include Quality & Efficiency
– Rational value demands Quality & Efficiency
– P4P ÆÆ Value-based contracting w/ incentives and
disincentives
– Increase market share
• Indirect incentives
– Administrative simplicity
– Network status
SignatureValueSM Advantage
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Example: HMO Value Network = 20% ∆
3.50
Value Network Avg. Cost: $141.09
Avg. Quality Score: 1.34
Non-Value Avg. Cost: $168.77
Avg.. Quality Score: 1.13
3.00
Quality Score
So….Future Incentives / Disincentives
for Providers
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2.50
2.00
1.50
1.00
0.50
$100.00
$150.00
Non-Value
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$200.00
$250.00
$300.00
Value
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Southern California 2006 Healthcare Trends:
Value vs. Full Networks
Restructured compensation model
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P4P Incentive
Group
Value Trend
Volume-based
Compensation
Full Trend
Company 1
-4.8%
9.1%
Company 2
-0.5%
21.73%
Company 3
1.2%
15.4%
Company 4
4.0%
40.0%
Company 5
8.6%
12.9%
Primary Care
Procedure-based Care
Value-based
Incentive
Value-based
Incentive
Note: Value Network launched in Southern California in 2003.
215 clients as of 2/1/06.
Volume-based
Compensation
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Integrating Provider and Consumer Incentives
Chronic Care
Management
Volume-based
Compensation
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• Share accountability with consumers, customers, and providers
• Evolve quality incentive programs for providers to value-based
compensation
• Consumer report cards to track behavior, choices, and results
• Value-based benefits for consumers
– Rewards for healthier behaviors, provider choices, and better
health outcomes—e.g., preferred Rx, value-priced networks
– Greater responsibility for their choices and results
• Mirror and expand on auto or property/casualty insurance model
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Thank you.
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