DECEMBER 11, 2012

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

Hospital Pay-for-Performance Programs in Maryland Produced Strong Results, Including Reduced Hospital-Acquired Conditions
ABSTRACT: Over the past decade Medicare has put in place several pay-for-performance programs for hospitals, including one that stopped paying hospitals for treating hospital-acquired conditions and the Hospital Value-Based Purchasing Program that went into effect in October 2012. In this article we describe how the State of Maryland crafted two pay-for-performance programs applicable to all hospitals--a Quality-Based Reimbursement Program similar to Medicare's value-based purchasing program and a separate program that compared hospitals' risk-adjusted relative performance on a broad array of hospital-acquired conditions. In the first program, all clinical process-of-care measures improved from 2007 to 2010, and variations among hospitals decreased substantially. For example, the statewide average rate of provision of influenza vaccines to patients with pneumonia increased by 20.5 percentage points, from 71.5 percent in 2007 to 92.0 percent in 2010. As a result of the second program, hospital-acquired conditions in the state declined by 15.26 percent over two years, with estimated cost savings of $110.9 million over that period. Extrapolating these results, the Medicare fee-for-service program nationally would have saved $1.3 billion over two years by implementing a similar hospital-acquired conditions program. The state programs used strong and consistent financial incentives to motivate hospitals' efforts to improve quality. This experience demonstrates that successful state experimentation can inform and influence federal policy and efforts to coordinate payment strategies in other states. [Full article available to subscribers or for $12.95] (Health Affairs, December 2012)

Physician Performance-based Compensation Gaining Ground
The 2012 Physician Compensation Survey by Physician Practice as well as the Hay Group's "Annual Physician Compensation Survey" found that physician pay is becoming increasingly linked to performance measures. One third of the 1,311 respondents in the Physicians Practice survey reported 20% or more of their pay is quality metric-dependent. The Hay Group found 80% of surveyed groups utilized incentive pay. (FiercePracticeManagement, November 27, 2012)

CMS Issues RFI on Health Care Quality for Exchanges
CMS is seeking public comment about existing quality measures and rating systems as well as ideas regarding how to enhance quality reporting for qualified health plans beginning in 2016. CMS released an RFI (Request for Information) on November 23, 2012 which includes 15 questions and requests input on strategies for improving health outcomes, preventing hospital readmissions, improving patient safety and reducing health disparities, and how insurers monitor the performance of hospitals and other providers with whom they have relationships. (Inside Health Policy, November 26, 2012)

Pay-for-Performance, Data Reporting May Disadvantage High-Risk Patients
Because of the growing demands of pay-for-performance models, physicians may be tempted to refuse high-risk patients with complex needs or patients more unlikely to adhere to care plans in order to prevent performance scores from being negatively impacted. A recent study published in the Journal of the American Medical Association concluded this: "Among Medicare beneficiaries with acute MI, the use of PCI was lower for patients treated in 3 states with public reporting of PCI outcomes compared with patients treated in 7 regional control states without public reporting. However, there was no difference in overall acute MI mortality between states with and without public reporting." [EDITORS NOTE: The 2007 COURAGE study found similar 5 year results between aggressive medical therapy and PCI suggesting to some observers that PCI utilization may be economically stimulated.] Larry Casalino, MD, concluded in a similar study reported in Health Affairs that awareness that "public reporting may increase disparities does exist among the leaders of medical societies, of organizations that devise quality measures, of organizations that are creating public reporting and P4P programs, and among public policymakers." (EHR Intelligence, November 29, 2012)

The Hammer and the Anvil: The Ethics of P4P for Hospitalists
Physicians in general and hospitals in particular because of their contracted status, are likely to face increasing financial pressures of performance-based payment models despite the "relative paucity of research regarding its effectiveness in improving outcomes" and they will find themselves "caught between the hammer of financial survival and the anvil of professional ethics." This article draws attention to the fate of high-risk and unassigned inpatients and outpatients. "The ethical problems raised by P4P are underappreciated and inadequately discussed in the literature, particularly for how rapidly and rampantly these programs are being piloted and implemented. Although the AMA has taken a fairly clear and reasonable stance on the appropriate considerations for P4P programs, it is not clear that payers are incorporating all these concerns." (The Hospitalist, November 2012)

Rethinking Pay-for-Performance
This blog from Harvard Health Policy Review calls pay-for-performance programs into question. "The behavioral economics literature has found time and again that monetary rewards undermine motivation for tasks which are complex and intrinsically rewarding, such as caring for a patient's health. Monetary rewards improve performance only when the tasks are simple and involve manual effort--think aspirin at arrival and beta-blocker prescribed at discharge, two process measures for acute myocardial infarction." The author concludes that "there's reason to believe that P4P isn't a program that can be fixed by tweaking incentives. No, it needs to be blown up entirely. Poor outcomes aren't the result of unmotivated physicians; they're the result of a myriad of other factors, including technology, infrastructure, and organizational culture." (Harvard Policy Review, November 28, 2012)

Report: Payment Reform Leaves Docs Uneasy
Kaiser Health News summarizes a December 2012 white paper from United Health Group entitled Farewell to Fee-for-Service?: A "Real World" Strategy For Health Care Payment Reform which reports the mixed views of physicians on pay-for-performance. Providers doubt the estimates that payment reform will result in the $200 to $600 billion in savings claimed. The report shows 400 U.S.-based primary care physicians and 600 U.S.-based specialists surveyed, did not favor the idea of a global capitation payment saying capitation put too much risk on the provider. (Kaiser Health News, December 7, 2012)

From Nikki Haley: A Post-Election Republican Vision for Healthcare
South Carolina's Nikki Haley is promoting health reform initiatives focused on what her administration calls fixing the health care system as opposed to Obama's plan to fix the health insurance system. Haley's administration is attempting to align major private sector players such as Boeing, Wal-Mart, and others in her Catalyst for Payment Reform (CPR) which is a "pay-for-performance" plan common to most industries. The first step is to open the "black box" of hospital billing to improve transparency for patients. (Forbes, November 9. 2012)

Bundled Payment Analytics - the Effect of Outliers on Payment and Incentives

CMS has introduced outlier limits on episode costs computed on a DRG basis. An average of 5.0% of all cases will fall outside the 5th and 95th percentiles. The example below is for DRG 190 (COPD with MCC).

(click chart above for full article and chart)

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Whose Data Is It Anyway? Why Can't We All Just Share It?

James Chase, MHA
Minnesota Community Measurement, Minneapolis, MN

Jeff Rideout, MD
TriZetto, Greenwood Village, CO

Charles Kennedy, MD
Aetna Accountable Care Solutions, Hartford, CT

Molly Coye, MD
UCLA Health System, Los Angeles , CA