NOVEMBER 16, 2012

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

U.S. Pay-for-Performance Program Works in England
Matt Sutton, Ph.D., of the Centre for Health Economics, Institute of Population Health, University of Manchester (England), implemented a pay-for-performance program similar to the CMS Hospital Quality Incentive Demonstration (HQID) which began in 2003. Analysis of the HQID has shown no effect on patient mortality and only brief, weakly positive effects on other patient outcomes. Sutton and his colleagues assessed their program's effects on patient mortality by comparing results from the 24 participating hospitals in Northwest England with results from all 132 of the other hospitals in England during the 18 months prior to initiation of the program and the 18 months following. Mortality was reduced by 1.3%. Sutton said, "This represents a substantial relative reduction rate of 6% and, during the 18-month period that we studied, equates to a reduction of 890 deaths in the total population of 70,644 patients with these conditions in the Northwest region of England." The study was published November 8, 20120 in the New England Journal of Medicine. (Internal Medicine News, November 7, 2012)

Will Pay for Performance Improve Quality of Care? The Answer Is in the Details
In this NEJM editorial, Arnold M. Epstein, MD, responds to the article above with special attention to the conflict of these positive results with studies calling into question the effectiveness of pay-for-performance programs. He notes, "Pay-for-performance has enormous face validity and ideological support even if success to date has been modest and the optimal program configuration is unclear." Many forces suggest that pay-for-performance programs will continue in spite of the lack of validation and he adds, citing the above study, "reports of successful programs are likely to spur wider use." Epstein's conclusion from the study by Sutton, et. al., is that "...the details of programmatic design and behavioral change induced by pay for performance will be critical as we refine our approach to financial incentives. Although the HQID failed to improve quality in the long term or ameliorate health outcomes, the Centers for Medicare and Medicaid Services has now changed the payment formula substantially and modified the list of quality metrics. Over time, value-based purchasing may indeed help improve the quality of care, but the speed of progress will probably depend on such details." (New England Journal of Medicine, November 8, 2012)

NCQA Report Shows Medicare Pay-for-Performance Provisions Paying Off
A new report from the National Committee for Quality Assurance (NCQA) " ...draws two main conclusions: that Medicare's program for making higher payments to health plans based on performance is reaping dividends, and that, prodded by quality measures, doctors are stepping up efforts to identify and counsel obese patients." The NCQA "concludes that there is a payoff." (National Committee for Quality Assurance, 2012)

Early Evidence Suggests Medicare Advantage Pay-for-Performance May Be Getting Results
A recent analysis authored by representatives from the National Committee for Quality Assurance (NCQA) finds that the pay-for-performance program established by the Affordable Care Act for Medicare Advantage plans may be working. Plan data shows significant improvement from 2010 to 2011 for measures including controlling high blood pressure, colorectal cancer screening, assessing adult Body Mass Index, and advising smokers to quit. There also is improvement on avoiding use of high-risk medications in the elderly and persistence of beta-blocker therapy after heart attacks.

Above is a chart demonstrating the improvement in which the share of Medicare HMO enrollees age 65 and over who use two or more medications that experts agree should usually be avoided in the elderly dropped by a third (lower rates of use are better)--from about 6 percent to 3.6 percent (Health Affairs Blog, October 29, 2012)

Keystone Mercy's New Agreement with Cardiology Practice is 'Pay for Performance'
Cardiology Consultants of Philadelphia has entered into a "pay-for-performance" agreement with Keystone Mercy Health Plan to promote quality and outcomes and encourage efficient care. The agreement, the first such agreement for Keystone, is part of AmeriHealth Mercy's PerformPlus program and employs quality metrics for a variety of therapies designed to prevent heart attacks and complications from hypertension and coronary artery disease. It also utilizes metrics to measure the effective management of potentially preventable readmissions and ambulatory-care sensitive conditions. (Philadelphia Business Journal, November 8, 2012)

HEALTH POLICY BRIEF: Pay-for-Performance
A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation provides an excellent analysis of the state of pay-for-performance programs. Predicting that such programs are likely to continue and noting that a number of questions have arisen surrounding the concept, the following conclusion is offered: "Experimentation with pay-for-performance programs should include thoughtful monitoring and evaluation to identify design elements that positively affect outcomes. Evaluation of these programs should take into account variations in health care markets, such as in the supply of providers, and should include control or comparison groups so that the effects of pay-for-performance can be isolated from other factors." (Health Affairs, October 11, 2012)

Medicare Excludes Mid-Sized Physician Groups from Start of New Payment System
Medicare had originally intended to apply the principles of value-based purchasing (using a modifier) to physicians in groups of 25 or more beginning in January 2015 based upon 2013 performance. Now Medicare's plan will apply only to groups of 100 or more. According to the Law, all physicians are to be under the new payment model by 2017. Medicare so far is not backing away from eventually rolling out the value payment system to individual doctors. "We want to emphasize," CMS wrote, "that in future rulemaking we anticipate proposing for smaller groups and for individual physicians a value-based payment modifier structure similar to the policies we are adopting for groups of physicians of 100 or more eligible professionals." (Kaiser Health News, November 2, 2012)

Should Pay-for-Performance Compensation be Replaced?
This Harvard Business Review Newsletter article questions the fundamentals of pay-for-performance. While noting that pay-for-performance has been the gold standard for compensation at least since proponents of agency theory 25 years ago began advocating the use of stock options in compensation packages the article suggest that questions are being raised about whether pay-for-performance at its core is fatally flawed or at least misused. Several resources are provided for readers to explore. (Harvard Business Review Newsletter, November 8, 2012)

Stable Performance? Then you're losing ground in Value-Based Purchasing

(click chart above for full article and chart)

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Confronting the Realities of Implementing Payment and Delivery Reforms

Dolores Yanagihara, MPH
Director, Pay for Performance Program, Integrated Healthcare Association, Oakland, CA

Harold Miller
Center for Healthcare Quality and Payment Reform, Pittsburgh, PA

David S. Joyner, MBA
Integrated Healthcare Association, San Francisco, CA

Gail Amundson, MD
Quality Quest for Health of Illinois, Peoria, Il

Samuel Nussbaum, MD
Wellpoint, Inc, Indianapolis, IN