Pay-for-performance.. Can it deliver?

1. Pay-for-performance..Can it deliver? Dale W. Bratzler, DO, MPH QIOSC Medical Director

2. What’s driving policy on health care?

3. US Healthcare SpendingProblem #1 - Cost! • $1.9 trillion • 16% of the gross domestic product • $6,280 for each man, woman, and child • Medicare and Medicaid - $600 billion in 2006

4. US Healthcare Spending • Five percent of the population accounts for almost half of total healthcare expenses • The 15 most expensive health conditions account for 44 percent of total healthcare care expenses • Patients with multiple chronic conditions cost up to seven times as much as patients with only one chronic condition Stanton MW, Rutherford MK. The high concentration of U.S. health care expenditures. Rockville (MD): Agency for Healthcare Research and Quality; 2005. Research in Action Issue 19. AHRQ Pub. No. 06-0060.

5. Spending is Unevenly Distributed

6. Spending is Unevenly Distributed Conwell LJ, Cohen JW. Statistical Brief #73. March 2005. Agency for Healthcare Research and Quality, Rockville, MD.

7. Spending is Unevenly DistributedAge Distribution of the Top 5%

8. Problem #2 = Variation Dartmouth Atlas of Healthcare

9. Wennberg/Fisher et al. • Evidence-sensitive care • The easiest one to attack • Patient preference-sensitive care • We are beginning to (finally) scratch the surface • Supply-sensitive care • Nobody has any idea what to do about this, short of legislative mandates and/or rationing

11. Elyria has three times the rate of angioplasties of Cleveland, 30 miles away

12. www.dartmouthatlas.com

13. Care of Patients with Chronic Illness New Study Shows Need for a Major Overhaul of How United StatesManages Chronic Illness “Almost One-Third of Medicare Spending for Chronically Ill Unnecessary. Improving Care Could Also Lower Costs”

14. Care of Patients with Chronic Illness "Variation is the result of an unmanaged supply of resources, limited evidence about what kind of care really contributes to the health and longevity of the chronically ill, and falsely optimistic assumptions about the benefits of more aggressive treatment of people who are severely ill with medical conditions that must be managed but can't be cured."

17. Problem #3 - Performance

18. RAND Study: Quality of Health Care Often Not Optimal Patients’ care often deficient, study says. Proper treatment given half the time. On average, doctors provide appropriate health care only half the time, a landmark study of adults in 12 U.S. metropolitan areas suggests. Medical errors corrode quality of healthcare system Medical Care Often Not Optimal Failure to Treat Patients Fully Spans Range of What Is Expected of Physicians and Nurses Study: U.S. Doctors are not following the guidelines for ordinary illnesses The American healthcare system, often touted as a cutting-edge leader in the world, suddenly finds itself mired in serious questions about the ability of its hospitals and doctors to deliver quality care to millions. .

19. In summary, we found that the quality of hospital care in the United States varies widely across different indicators of quality and that individual hospitals vary in their performance according to indicators and conditions. N Engl J Med 2005;353:265-274.

20. Quality from the Patient’s PerspectiveHospital Quality Measures, Qtr. 4, 2005 The “Appropriate Care Measure” reflects the percentage of hospital patients that receive all indicated care (all-or-none).

21. Unsustainable cost growth(questionable returns in healthy lifespan) +Huge variation in services delivered(no relationship to outcomes) + Data demonstrating significant gaps in delivery of ideal care = Need to Pay Differently

22. Calls for Medicare to Provide Payment for Quality • IOM report 2002, 2006 • Health Affairs article, former HCFA administrators, 2003 • MedPAC report 2004 • Private sector efforts • Bridges to Excellence • Leapfrog Group

23. Presentation Outline • Pay-for-performance… does it work to improve quality? • Payment incentive models • The potential for unintended consequences

24. Does Pay-for-performance improve quality? • Strategies for accelerating quality improvement: • Public reporting • Pay-for-performance Despite limited evidence demonstrating benefit, P4R and P4P are being widely advocated

25. Hospital Public Reporting 0.4% payment incentive

26. Hospital Public Reporting • Currently have a very limited set of measures • Focus predominantly on processes of care • Few outcomes measures because of risk-adjustment challenges

27. Hospital Public Reporting • Hospital Quality Alliance • 10 measures recently expanded to 21 (AMI, HF, Pneumonia, SIP) • New York State CABG mortality • Wisconsin “Quality Counts” • Generally, quality seems to improve • Mechanism?? • Little data that reporting drives much patient decision making at this point • Hospital market share largely unaffected

28. Pay-for-PerformanceMuch to be learned • While there are lots of demonstrations, there is little evaluative data at this time

29. Ann Intern Med. 2006;145:265-272.

30. Does P4P improve the quality of health care? • Seventeen studies with control groups • 13 focused on process of care measures • 5 of 6 studies of physician-level financial incentives linked to improved quality • 7 of 9 studies of provider group-level incentives found partial or positive effects on quality • 4 studies suggested unintended consequences of payment incentives Petersen LA, et al. Ann Intern Med. 2006;145:265-272.

31. HQID Hospital Participation • Voluntary • Eligibility: Hospitals in Premier Perspective system as of March 31, 2003 • 278 hospitals started • Demonstration Project: Pilot test of concept • Can economic incentives effectively improve quality of care?

32. Condition X Condition X Condition X 1st Decile 2nd Decile 1st Decile 3rd Decile 4th Decile 1st Decile 2nd Decile Top Performance Threshold 5th Decile 3rd Decile 6th Decile 2nd Decile 4th Decile 7th Decile 5th Decile 8th Decile 3rd Decile 9th Decile 6th Decile 4th Decile 10th Decile 7th Decile Hospital 5th Decile 8th Decile 9th Decile 6th Decile 10th Decile 7th Decile Payment Adjustment Threshold Hospital 8th Decile 9th Decile 10th Decile Year One Year Two Year Three

33. Results show significant improvement

34. CMS/Premier HQI ProjectReduction in Variation • Positive trend in both upper and lower scores of range • Reduction in variance (narrowing of range) • Median moving upward

35. Does P4P reward improvement? Those that improved the most, received the lowest bonus payments. Those at high levels of performance to start with reaped most of the rewards. Rosenthal MB, et al. JAMA. 2005;294:1788-1793.

36. Condition X Condition X Condition X 1st Decile 2nd Decile 1st Decile 3rd Decile 4th Decile 1st Decile 2nd Decile Top Performance Threshold 5th Decile 3rd Decile 6th Decile 2nd Decile 4th Decile 7th Decile 5th Decile 8th Decile 3rd Decile 9th Decile 6th Decile 4th Decile 10th Decile 7th Decile Hospital 5th Decile 8th Decile 9th Decile 6th Decile 10th Decile 7th Decile Payment Adjustment Threshold Hospital 8th Decile 9th Decile 10th Decile Year One Year Two Year Three The “winners”

37. Cost savings? • To date, there is little evidence that pay-for-performance programs save money • Many target measures that address underutilization of care and services • Most do not provide incentives for efficiency

38. Little coordination • At this time, there has been little coordination between payers • Multiple different models and measures even within the same clinical setting

39. Payment Incentives

40. Financial Rewards/Incentives • Bonus Payments • Awards for Improvement Projects • Fee Schedules Based on Performance • “At-Risk” Contracting • Cost Differentials for Consumers

41. P4P Issues • What to Reward • Relative quality • Absolute threshold • Improvement • How to Finance Incentives • Across-the-board reduction to create pool • Offsetting penalties • Offsetting savings • New dollars: ? Source

42. P4P Issues • Who to reward? • Individual practitioners • Groups of practitioners • Communities (?!)

43. Challenges and Pitfalls to P4PThe potential for unintended consequences….

44. Challenges to Incentives for Quality Performance • Selection of measures/off label use of measures • Dynamic measurement environment • Measures maintenance • Hospital Burden • Time lags • Validation/Scoring methodology • Need for proof of effectiveness • Unintended consequences

46. Issues in the Selection of Quality Measures • Outcome measures (i.e. mortality) require risk adjustment • Disease-specific measures don’t necessarily reflect overall quality • Volume may or not be a proxy for quality • Statistical issues with low volume programs • Hospital performance versus medical staff performance

48. Unintended Consequences • Direct harm • Indirect harm

49. Pneumonia as an example…Direct Harm • Antibiotics within 4 hours of hospital arrival • Process linked to improved patient outcomes, however • Some patients who are ultimately diagnosed with pneumonia do not have an obvious diagnosis at the time of arrival • Potential for inappropriate antibiotic administration to those who don’t have pneumonia to achieve high performance rates on the measure

50. Unintended ConsequencesDirect Harm • Giving a beta blocker to a patient with contraindications • Use of VTE prophylaxis in patients with bleeding risks • Clinical issues of uncertainty that are exacerbated by incentives created by pay-for-performance