SEPTEMBER 20, 2012

Welcome to the Pay for Performance Update eNewsletter
Editor: Philip L. Ronning
This issue sponsored by the Pay for Performance Summit

AAFP Urges CMS to Limit Care Coordination Payments to Primary Care Docs
The Centers for Medicare and Medicaid Services (CMS) has proposed a code to pay for care-coordination services in the month following patient discharges. The American Academy of Family Physicians (AAFP) has asked CMS to refine the proposed code to ensure that it is restricted to primary care physicians, the providers CMS intended to benefit. The code is not currently restricted to "actual primary care physicians" according to the AAFP. (Inside Health Policy, August 28, 2012)

Is Healthcare in Denial about Pay-for-Performance?
KMPG in an August 22 webinar reported on their recent survey of 104 healthcare executives, 51 payers and 54 pharmaceutical companies regarding the sustainability of their current business models. This article summarizes the survey's details but generally the executives pronounced their models "somewhat sustainable." According to Ed Giniat, healthcare and pharmaceuticals national practice leader, "Organizations are clearly considering the effectiveness of fee-for-service business models, but migration to more value-based models will take time, and will include a mix of old and new delivery and payment systems. The only way for more rapid integration to occur is for stakeholders to lead the change and make it happen, but many organizations are using techniques more aligned with sustaining existing models." (Health Technology Management, August 29, 2012)

Blum Seeks Increased Focus on Outcomes as Part of MA Quality Ratings
Jon Blum, CMS Medicare Chief, has said he is confident that encouraging Medicare Advantage (MA) beneficiaries to move out of plans with lower quality scores will result in better care across all levels. Establishing MA star quality ratings has been a key CMS objective for 2012 he said, yet the program has come under fire from the Government Accountability Office, lawmakers and the American Action forum. Blum said further that five star plans will continue to have access to year-round marketing in an effort to move beneficiaries to higher quality plans. (Inside Health Policy, September 12, 2012)

Medicare Pilot Program Savings for Treating Dual-Eligibles
Based upon deeper research of the Physician Group Practice Demonstration researchers have found the Project created significant savings especially for dual eligilbles. The graph below demonstrates these results and the article provides further details. (Kaiser Health News, September 11, 2012)

Athenahealth Targets Value-based Payment with HDS Acquisition
Athenahealth, Inc., acquired Healthcare Data Services LLC in a move aimed at responding to improving their pay-for-performance and other payment innovations. Jonathan Bush, CEO and Chairman, said, "Value-based payment models are fundamentally changing the way patient care is coordinated, delivered, and reimbursed. With HDS, we can help health care organizations to thrive in the face of change--to drive down costs through smart, high quality care coordination and to understand the totality of services being provided. This acquisition supports our existing efforts to create an information backbone that makes health care work as it should." Value-based payment, as Athenahealth see it, is based on pay-for-performance and other innovations that reward providers for outcomes. (Boston Business Journal, September 13, 2012)

A Lesson in Pay: How Geisinger Structures Its Physicians' Compensation to Support Improvements in Quality, Efficiency, and Volume
Geisinger Health System Foundation and Geisinger Health Plan's Thomas H. Lee, a board member, Albert Bothe, executive vice president and CMO, and Glenn D. Steele, MD, president and CEO, have authored a Health Affairs article detailing Geisinger's performance payment system. Under the model, called "a work in progress," physicians receive approximately 80% of their total compensation monthly, based on a salary that reflects "his or her work effort" and the remaining 20% is tied to annually determined performance incentives A special approach has been developed for specialist recognizing quality, innovation, legacy, growth and financial results.. A subscription or fee payment is required to view Health Affairs article. (Becker's Hospital Review, September 11 2012)

Fewer States Pass Laws Cutting Medicaid Provider Pay
An analysis by the Children's Hospital Association (CHA) found that fewer states approved Medicaid provider pay cuts this year focusing instead on new reimbursement approaches that cut costs while improving care and more states expanded Medicaid and CHIP coverage thereby improving coverage for children. (Inside Health Policy, Augusts 30, 2012)

Why Pay-for-Performance Falls Short of Impacting Cost Savings for the Healthcare System
Continuing a persistent theme in the literature and the media including analyses of the Premier Hospital Quality Incentive Program, a Medicare demonstration project, this blog in the Atlanta Constitution questions the validity of pay-for-performance approaches to reducing costs and improving quality by reducing variation. Says the author, "Most physicians do not know the practice patterns of their colleagues because they focus on the delivery of care for their patients. To move the dial and substantially reduce the cost of healthcare, physicians, hospitals, and post-acute care providers need to have an incentive program that changes the behavior of care delivery without reducing the quality of care. By aligning the proper incentives with the appropriate checks and balances, the healthcare delivery system will behave differently and in lockstep to reduce of cost of care." (Atlanta Journal Constitution, May 29, 2012)

Integrating Pay-for-Performance into Health Care Payment Systems
This paper is written by a Harvard University candidate in the Program in Health Policy, arguing in favor of pay-for-performance. The author says in the abstract, "[P]hysician allocation of effort to various tasks is inefficient without pay-for-performance, and the optimal design of the pay-for-performance contract can mitigate multitasking." While heady, such analyses are worthy of consideration given the attacks being leveled against pay-for-performance systems. (Havard.edu, January 13, 2012)

States with Nursing Pay-For-Performance Programs

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Data Liberation: The Next Frontier in Information Technology

Gary Ferguson, PhD
TIBCO Inc, Palo Alto, CA