JULY 26, 2012

Welcome to the Pay for Performance Update eNewsletter
This issue sponsored by the Pay for Performance Summit

Reducing Payments to Hospitals Doesn't Reduce Health Care Costs, It Just Shifts Them to Someone Else
Likening the role of government in healthcare reform efforts to piloting a glider, Lynn Nicholas, CEO of the Massachusetts Hospital Association, suggests over steering can result in a crisis. Successful reform calls for collaboration between the government and stakeholders, not the exertion of government control. She believes that the progress that has been made in Massachusetts must be sustained and that the government's role is to "...promote transformation: reform its own health care programs; set consensus goals for everyone to achieve; establish transparency requirements so all have timely information to make wise decisions; streamline regulations to smooth the transition to innovative models of care; give stakeholders a meaningful voice in making decisions; pay adequately for the care provided to enrollees in their programs; and avoid new and costly assessments on providers." (Boston Globe, July 16, 2012)

Highmark Makes Change to Hospital Pay-for-Performance Program to Place More Emphasis on Decreasing Preventable Readmissions
Effective this month Highmark's Quality Blue pay-for-performance program requires hospitals to measure and reduce 30-day readmissions. Previously Highmark allowed hospitals to select program indicators. In making this move Linda Weiland, Vice President of Provider Network Innovations and Partnerships, noted that readmissions cost the US health system an estimated $25 billion. "Having increased attention on the preventable root causes of readmissions should help to improve the quality of care provided to our members and reduce health care costs." Weiland said. (Highmark, July 11, 2012)

Pay-for-Performance Programs May Widen Resource Gap for Providers in Poor Areas
Lawrence P. Casalino, MD, of the Weill Cornell Medical College, finds in a recent study that pay-for-performance programs will increase disparities in healthcare between wealthier and poorer communities. Casalino said, "If they don't score as well, then they won't get bonuses. You'll have the rich getting richer and the poor getting poorer." Such programs, Casalino advises, must adjust for socioeconomic status. (Weill Cornell Medical College, July 2012)

Pay for Performance Has No Place in Healthcare
Arguing that healthcare quality cannot be appropriately measured, this blogger maintains that pay-for -performance is out of place in healthcare. He notes the following inappropriate pay-for-performance analogies: teachers' quality is judged by students' attendance, musicians' quality is graded by ticket sales, congressmen's quality depends upon approval ratings, meal quality depends upon weight, and book quality depends upon the number of pages. (MEDCITY News, July 15, 2012)

3 Steps to Quality Pay for Physicians
Physicians' pay is increasingly dependent in part on non-volume incentives. Hay Group found last year that 66% of organizations paying physicians incorporated some quality measures into that payment. Sullivan, Cotter and Associates reported earlier this year that 72% of the respondents in their survey linked pay to quality. Three broad strategies are recommended here for physicians for physicians involved with pay-for-performance systems: 1) know what is being measured, 2) figure out how to get there, and 3) make sure you have the tools. (amednews.com, July 23, 2012)

Surgeons, CMS Explore New Pay Approach that Sets Value-Based Updates within Specialties
The American College of Surgeons (ACS) has been working with CMS to devise an approach called the Value-Based Update which would allow all physicians who participate in existing Medicare quality programs to create new quality goals for the patients with conditions they treat. Frank Opelka, MD, Chair of the ACS Board of Directors, described it as a way to fix the Sustainable Growth Rate. "Let's pick a target. We want to improve cardiac care and it's not just the cardiologist, it's the primary care cardiologist, it's the cardiac surgeons, it's the anesthesiologists, it's [the] pulmonary [physicians]," Opelka said. "Everyone who touches that patient will be involved in incentives, in meeting the targets." (Inside Health Policy, July 18, 2012)

Medicare's Lake Wobegon Approach to 'Pay for Performance'
The CMS approach to Medicare Advantage pay-for-performance plan reminds the author of Lake Wobegon because nearly all (90%) of Medicare Advantage plans are considered above average according to a recent report. (For the report go to: http://www.forbes.com/sites/aroy/2012/04/24/the-obama-campaigns-8-billion-taxpayer-funded-medicare-slush-fund/). The author recommends scrapping the Quality Bonus Payment Demonstration, prepare guidelines prospectively, and adjust star ratings to account for regional differences in quality. (Health Affairs Blog, June 26, 2012)

Rewarding Preventive Care in South Carolina
South Carolina wants to stop fee-for-service payments and instead reward providers who create healthier populations. "We're spending a lot of time with providers trying to correct problems caused by the way we pay people," he says Tony Keck, Director of South Carolina' Department of Health and Human Services. (Governing, July 24, 2012)

Hospital Systems Ask Ways and Means to Cast Aside MedPAC's Proposed E&M Cuts
The Integrated Health Care Coalition, led by former American Medical Association chief J. James Rohack, MD, is urging the House Ways and Means Committee to ignore MedPAC's recommendation to significantly reduce reimbursement for hospital evaluation and management (E&M) visits arguing that these cuts make no sense in light of ongoing efforts to increase care coordination. (Inside Health Policy, July 18, 2012)

Pay for Performance in Health Care: Methods and Approaches

This book from Research Triangle Institute is an insightful, detailed analysis of pay-for performance in healthcare. It offers suggestions on how to improve the second generation of P4P programs.

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Creating Win-Win-Win Strategies for Successful Payment and Delivery

Harold Miller
Executive Director, Center for Healthcare Quality and Payment Reform, President and CEO, Network for Regional Healthcare Improvement