Centers for Medicare & Medicaid Services and Quality-Based Purchasing

1. Centers for Medicare & Medicaid Services and Quality-Based Purchasing Kenneth S. Fink, MD, MGA, MPH Chief Medical Officer CMS Region X

2. IOM Definitions • Quality “The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge” • Efficiency “In an efficient health care system, resources are used to get the best value for the money spent. The opposite of efficiency is waste, the use of resources without benefit to the patients….”

3. IOM Recommendation That … the Department of Health and Human Services create an environment that fosters and rewards improvement by: • creating an infrastructure to support evidence-based practice, • facilitating the use of information technology, • aligning payment incentives, and • preparing the workforce to better serve patients in a world of expanding knowledge and rapid change.

4. CMS Quality Vision The right care for every person every time

5. CMS’ Quality Improvement Roadmap Strategies • Work through partnerships • Measure quality and report comparative results • Utilize pay for performance – improve quality and avoid unnecessary costs • Encourage adoption of effective health information technology • Promote innovation and the evidence base for effective use of technology

6. CMS Current Context • Rising costs drive focus to value • Current system rewards quantity, not quality • Need to align payment structure with improved quality of care • Facing fee schedule reduction • Payment reform receiving increased attention

7. Increasing Expenditures

8. Examples of Poor Quality Carefor those >65 From 2005 NHQR

9. Medicare should care about quality • Increases benefit and reduces harm • Decreases variation • Improves value • Improves health outcomes

10. Strategies for Quality and Efficiency Improvement • Nonfinancial incentives • Financial incentives • Organizational redesign • Quality Improvement Organizations

12. Support for Pay for Performance • President • FY 2006 budget • “The Administration will take further steps to encourage excellence in care by exploring provider payment reforms that link quality to Medicare reimbursement in a cost neutral manner. Such payment reforms should be flexible enough to support innovations in health care delivery.” • FY 2007 budget • Expansion of P4P initiatives • Congress • Deficit Reduction Act provisions for hospitals, home health agencies, and a gainsharing demonstration

13. Additional Support for Pay for Performance • MedPAC • “Medicare is ready to implement pay for performance as a national program and that differentiating among providers based on quality is a important first step towards purchasing the best care for beneficiaries and assuring the future of the program.” • IOM • “New payment incentives must be created to encourage the redesign of structure and processes of care to promote higher value….Its purpose is to align payment incentives to encourage ongoing improvement in a way that will ensure high-quality care for all.”

14. What does Pay for Performance mean to CMS? • Mechanism for promoting better quality, while avoiding unnecessary costs • Explicit payment incentives to achieve identified quality and efficiency goals

15. Measures Quality, cost, patient experience Valid and reliable Evidence based Data Infrastructure Collection Analysis Validation Appeals Incentive Methodology Individual measures or composite Attainment and improvement Bonus or differential Funding source Pay for Performance Elements

16. P4R/P4P Programs • Hospital Quality Initiative • Home Health Agency Pay for Reporting • Physician Voluntary Reporting Program (PVRP) • Physician Resource Use • Medicaid

17. Hospital Quality Alliance (HQA) • Public-private collaboration of federal agencies, key hospital and health care organizations, and consumer groups • CMS, AHRQ, AHA, NQF, JCAHO, AMA, AFL-CIO, AARP • Supports CMS’ implementation of hospital P4R/P4P • Purpose is to adopt one robust, nationally standardized and prioritized set of measures, reported by every hospital in the country and accepted by all purchasers, overseers, and accreditors

18. Hospital Quality Initiative • MMA Section 501(b) • Authorized hospital pay for reporting • Payment differential of 0.4% for FYs 2005-07 • Starter set of 10 measures selected by HQA • AMI, HF, pneumonia, surgical infections • Public reporting through CMS’ Hospital Compare website • High participation rate (>98%) for small incentive

19. Hospital Quality Initiative • DRA Section 5001(a) • Payment differential of 2% for FYs 2007- • Expanded measure set, based on IOM’s December 2005 Performance Measures Report • Added HCAHPS • DRA Section 5001(b) • Plan for hospital P4P beginning with FY 2009 • Plan must consider: quality and cost measure development and refinement, data infrastructure, payment methodology, and public reporting

20. Premier Hospital Quality Incentive Demonstration • Involved more than 250 voluntary hospitals • Used 34 quality measures • AMI, CABG, pneumonia, HF, hip/knee arthroplasty • Top decile received 2% increase and second decile received 1% increase • In year 3, those below year 1 ninth decile cut-off received 1% decrease and below tenth decile cut-off received 2% decrease

21. Premier Hospital Quality Incentive Demonstration

22. Home Health Agency P4R • Authorized in DRA Section 5201 • Begins in 2007 • 2% payment differential for P4R • Public reporting on Home Health Compare website • MedPAC Report to Congress on home health P4P by June 1, 2007

23. Physician Fee Schedule • In 1992, the Medicare Fee Schedule took effect • As part of the 1997 BBA, Congress created the Sustainable Growth Rate (SGR) • Since 2002 the fee schedule would have resulted in negative annual updates without Congressional intervention • Facing a 5% reduction for 2007

24. Physician Voluntary Reporting Program (PVRP) • An effort to begin to align payment with quality • Involves submission of new codes on claims to reflect quality • Alternatively can participate in DOQ-IT • Starter set of 16 measures to be expanded to include nearly all specialties • Registrants receive confidential reports

25. PVRP Initial Measures • Aspirin at arrival for acute myocardial infarction • Beta-blockers at arrival for acute myocardial infarction • Hemoglobin A1c control for diabetes • Low-density lipoprotein control for diabetes • High blood pressure control for diabetes • ACE inhibitors or ARBs for left ventricular systolic dysfunction • Beta-blockers for history of acute myocardial infarction • Falls assessment for elderly • Antidepressants for depression • Dialysis dose for ESRD • Hematocrit level for ESRD • Arteriovenous fistula for dialysis • Antibiotic prophylaxis for surgery • Thromboembolism prophylaxis for surgery • Internal mammary artery use for CABG • Pre-operative beta-blocker for isolated CABG

26. Example: G-codes • Beta-blocker therapy for patient with prior myocardial infarction • G8033 Patient taking a beta-blocker • G8034 Patient not taking a beta-blocker • G8035 Patient not eligible for beta-blocker

27. Example: CPT-2 codes • Beta-blocker therapy for patient with prior myocardial infarction • 4006F Patient taking a beta-blocker • 4006F-1P Patient not taking a beta-blocker for medical reasons • 4006F-2P Patient not taking a beta-blocker for patient reasons • 4006F-3P Patient not taking a beta-blocker for system reasons

28. Steps toward P4P • Pay for reporting was hoped to begin in 2008 with pay for performance likely to follow • Methodologies being developed • Calculating performance rates • Determining payments • Ongoing issues • Practice or physician • Process or outcome • Accountability • Risk adjustment

29. Medicaid • P4P is allowable and voluntary for state Medicaid programs • At least 12 states have implemented P4P initiatives • CMS will provide technical assistance to states • CMS encourages states to evaluate their P4P programs

31. Improving Efficiency • MedPAC recommends: • "CMS should use Medicare claims data to measure fee-for-service physicians' resource use and share results with physicians confidentially to educate them about how they compare with aggregated peer performance." • CMS created the Physician Resource Use Workgroup

32. Efficiency Efforts • Prospective Payment System • Physician Resource Use Reports • Episode Grouper software evaluation

33. Prospective Payment System • Pays a predetermined, fixed amount • acute inpatient hospitals • home health agencies • hospice • hospital outpatient • inpatient psychiatric facilities • inpatient rehabilitation facilities • long-term care hospitals • skilled nursing facilities • Excludes physician services

34. Cost of Care Measurement Goals • To develop meaningful, actionable, and fair cost of care measures of actual to expected physician resource use • To link cost of care measures to quality of care measures for a comprehensive assessment of physician performance

35. Resource Use Reports • Used for highly utilized imaging services • Phase I: Echocardiograms for Heart Failure • Phase II: MRs/CTs for Neck Pain • Lessons learned • Limitations to use of claims data • Costs of reports likely to outweigh benefits • Could be used to identify outliers

36. Episode Grouper Evaluation • To understand episode grouper technology and its potential uses • To compare and contrast the characteristics of selected, commercially-available episode groupers • To determine which grouper, if any, best defines comparable episodes of care at the individual physician level for the Medicare population

37. Episode Grouper Evaluation • Phase I: Data Configuration Issues • Focusing on six conditions • Diabetes 4. Stroke • Heart failure 5. Prostate cancer • COPD 6. Hip fracture • Phase II: Risk Adjustment • Phase III: Groupers as Physician Resource Use Reporting Tools

38. Some P4P Demonstrations • Physician Group Practice • Medicare Hospital Gainsharing • Medicare Care Management Performance • Medicare Health Care Quality

39. Physician Group Practice • Authorized by BIPA 2000 • 3 year project to incentivize care coordination for chronically ill and high cost beneficiaries in an efficient manner • Groups share in financial savings of actual spending compared to target spending • Addresses DM, HF, CAD, and prevention • Ten group practices representing 5,000 physicians and 200,000 Medicare beneficiaries • Everett Clinic

40. Medicare Hospital Gainsharing • Authorized by DRA 2005 • Allows gainsharing between hospitals and physicians • Aligns incentives between hospitals and physicians to improve quality and efficiency • 3 year project involving 6 sites, 2 of which are rural

41. Medicare Care Management Performance • Authorized by MMA 2003 • P4P pilot with physicians to promote adoption and use of health information technology to improve quality • Bonus payments made for meeting performance standards in DM, HF, CAD, and prevention • 3 year project targeting small and medium sized practices participating in DOQ-IT and located in CA, AR, MA, and UT

42. Medicare Health Care Quality • Authorized by MMA 2003 • 5 year project testing major changes to improve quality and efficiency across a health care system • Also addresses patient safety, effectiveness, patient-centeredness, timeliness, and equity • Participating entities include physician groups, integrated delivery systems, and regional health care consortia

43. Summary • CMS is committed to improving quality and efficiency • CMS’ roadmap for improving quality and efficiency includes • Moving forward through partnerships • Using financial incentives • Reporting measures publicly • Encouraging adoption of health information technology

44. “The entire concept of pay for performance is offensive. We shouldn’t ever expect anyone to get paid more for doing what they were . . . paid to do,” he said. Medicare “must demand the highest quality and no less.” Quality should be expected “from each and every provider. And my solution would be to the provider who can’t provide quality care, to defrock ‘em.” Representative Stark as reported in CQ HealthBeat

45. Resources • Kenny Fink • kenneth.fink@cms.hhs.gov • 206-615-2390 • http://www.cms.hhs.gov/QualityInitiativesGenInfo/ • http://www.cms.hhs.gov/DemoProjectsEvalRpts/MD/list.asp • http://www.cms.hhs.gov/QualityImprovementOrgs/ • http://www.cms.hhs.gov/MedicaidSCHIPQualPrac/