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Provider Pay for Performance: Is it Crazy to Pay More? When Does it Make Sense?

Provider Pay for Performance: Is it Crazy to Pay More? When Does it Make Sense?. March 7, 2005 Arnie Milstein MD, MPH Pacific Business Group on Health Mercer Human Resource Consulting arnold.milstein@mercer.com. A. Milstein  2005.

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Provider Pay for Performance: Is it Crazy to Pay More? When Does it Make Sense?

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  1. Provider Pay for Performance:Is it Crazy to Pay More?When Does it Make Sense? March 7, 2005 Arnie Milstein MD, MPH Pacific Business Group on Health Mercer Human Resource Consulting arnold.milstein@mercer.com A. Milstein  2005

  2. Time to Reward Clinical IT Adoptionand Other Performance Leaps?

  3. Our Urgent Need to Produce Health “Better, Faster, and Cheaper” Annual Percent Changes per Capita in Health Care Expenditures and in Average Hourly Wages for Workers in All Industries, 2000 through 2003 Data are from Strunk and Ginsburg, 2004. Dental work by Dr. Milstein.

  4. Actual Reduction in Spending Trend Without Quality Compromises:Outswimming the Shark in Nevada vs. 12% trend Per Capita Health Care Spending (Low Wage Hotel Workers in Nevada) Initiation of new navigational tools and incentives

  5. Success Required Two New MD Performance Measurements(a real MD distribution from a comparatively efficient city;also applies to care management & treatment options) 50th %ile Low Longit. Efficiency High Quality High Longit. Efficiency High Quality (Dream Suppliers) MD Quality Index(outcomes or % adherence to EBM) 50th %ile Lower Higher Low Longit. Efficiency Low Quality (Nightmare Suppliers) High Longit. Efficiency Low Quality Lower Longit. Efficiency/ Higher Cost Higher Longit. Efficiency/ Lower Cost MD Longitudinal Cost Efficiency Index AKA “TCO” (average total cost per acute episode or year of chronic care) Adapted from Regence Blue Shield

  6. Inducing Rapid and Continuous IT-enabled Re-Engineering of Health “Production” is the only Alternative to Social Divisiveness 50th %ile Continuous Efficiency Gains Offset Cost of Medical Miracles Low Longit. Efficiency High Quality High Longit. Efficiency High Quality (Best) MD Quality Index(outcomes or % adherence to EBM) 50th %ile Lower Higher Low Longit. Efficiency Low Quality (Worst) High Longit. Efficiency Low Quality Higher Longit. Efficiency/ Lower Cost Lower Longit. Efficiency/ Higher Cost MD Longitudinal Cost Efficiency Index (total cost per case mix-adjusted treatment episode) Adapted from Regence Blue Shield

  7. A Purchaser and Consumer Near-Term Vision: High “PPSI”(PPSI=Provider Performance Sensitivity Index) Americans High Q 50 ppts $ 40 ppts Chasm Crossing Consumerism (Tiered Plans w or w/o Spending Accounts)& P4P “PRN” Clinical re-engineering by MDs, hospitals & hlth risk reductn programs Performance Transparency (Quality & Cost Efficiency) Value from Health Benefits Spending (Health Gain / $)  Market sensitivity to hospital & MD performance Performance comparisons for hospitals, MDs & treatments Q = % adherence to evidence-based rules $ = Per capita health care spending. Includes new investment in IT / industrial engineering capability. Excludes impact of inflation, aging and biomedical innovation Low 2002 2012 Evolutionary Path

  8. A Nearly Identical IOM Vision EMPLOYERS CARE SYSTEM OUTCOMES Supportive market environment Organizations that facilitate the work of patient-centered teams High performing patient-centered teams • Safe • Effective • Efficient • Personalized • Timely • Equitable GOVT & PLANS • CARE SYSTEM RE-DESIGN IMPERATIVES • Redesigned care processes • Effective use of information technologies • Knowledge and skills management • Development of effective teams • Coordination of care across patient conditions, services, and settings over time • Use of performance and outcome measurement for continuous quality improvement and accountability   Adapted from Crossing the Quality Chasm, IOM, 2001.

  9. When is Paying Extra Not Crazy? • To jumpstart provider prioritization of performance management & required infrastructure (industrial engineers & IT) • To motivate provider oligopolists • To overcome the practical, psychological & ethical limits of health care consumerism • To help form a critical mass of regional purchasers (Per Deming, utilize P4P a last resort)

  10. A Provider IT Reward Contingency Sequence That Makes Sense to Purchasers(In Partnership with CMS) • 2003: Meets AHRQ/CMS/Leapfrog PODS/CPOE leaps or NCQA PPC certification • 2004: Achieves additional locally-specified e-health capabilities (eg IHA, BTE, insurers) • 2006: Uses CCHIT certified product • 2006: Uses CCHIT certified product and achieves highest level of CSI specified connectivity • 2006: Passes Leapfrog/AHRQ CPOE challenge test • 2007: Performs in top quartile on aggregate measures of quality and longitudinal cost efficiency

  11. How Soon Can We Reduce P4P? How Soon Will Congress… • Speed universal provider performance transparency via exchange of CMS claims data with private sector plans, subject to strict patient privacy protection? • Encourage all U.S. health benefits plans to tailor consumer cost-sharing to the “TCO” and quality of individual physicians, hospitals, and treatment options (via CMS, tax and/or competition policy)? • Increase the sensitivity of all U.S. plans’ cost-sharing to provider performance (especially individual MDs) until America steadily outswims the shark?

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