B
Review of the Evidence



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Rewarding Provider Performance: Aligning Incentives in Medicare B Review of the Evidence

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Rewarding Provider Performance: Aligning Incentives in Medicare TABLE B-1 Articles Identified as Assessing Explicit Financial Incentives and Health Care Quality from a Systematic Review of the Literature After Applying Study Inclusion and Exclusion Criteriaa Reference Study Design Incentives Norton, 1992 RCT (2 arms); November 1980 to April 1983; 36 SNFs (18 study facilities; 18 control facilities) Level: payment system Type: bonus Duration: admission incentive up to 4 y; outcome and discharge incentives 1 to 2 y Admission incentive: per diem bonus for type D ($5) and E ($3 to $28) patients (vs. $36 reimbursement) Outcome incentive: improved health status within 90 d (measured by ADL classification); $126 to $370 per case (range of bonus) Discharge incentive: timely discharge and resident did not return within 90 d; $60 to $230 (range of bonus); type A patients not eligible Payment frequency: NS Shen, 2003 CBA; FY 1991 to 1995; 5552 clients (2367 OSA clients; 3185 Medicaid clients) Level: payment system Type: PBC Duration: FY 1993 to 1995 Description: additional funds based on efficiency, effectiveness, and service to special populations Efficiency: minimum service delivery (% of contracted amount); minimum service to primary clients (% of units delivered) Effectiveness: abstinence/drug-free 30 d before termination; reduction of use of primary substance abuse problem; maintaining employment; employability; employment improvement; reduction in number of problems with employer; reduction in absenteeism; not arrested; participation in self-help during treatment; reduction of problems with spouse/family members Special populations: female; age 0 to 19 y; age ≥50 y; corrections; homeless; concurrent psychological problems; history of IV drug use; polydrug use Payment frequency: yearly

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Access; outcome Markov model Experimental homes admitted more type D and E patients (sicker patients) than control homes Patients in experimental homes were more likely to be discharged to home or to an ICF and had less likelihood of hospital admission or death (P < 0.001) Positive 3 Access Probit specification (regression) Significant decrease in the likelihood that an OSA patient was a “most severe user” after PBC implementation compared with the likelihood of a Medicaid (control) patient; coefficient = −0.74; t-value = 3.26; P ≤ 0.01 Negative 2

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Rewarding Provider Performance: Aligning Incentives in Medicare Reference Study Design Incentives Clark et al., 1995 CBA; July 1992; 7 CMHCs; 185 clients (95 in TCM and 90 in CTT) Level: provider group Type: enhanced FFS Duration: NA Description: CMHCs received $15.75 per 15 min spent in community settings delivering MIMS Payment frequency: FFS Hillman et al., 1998 RCT (2 arms); 1993 to 1995; 52 PC sites (26 intervention; 26 control) Level: provider group Type: bonus Duration: 18 mo Description: compliance with cancer screening for women age ≥50 y; aggregate compliance scores and improvement in scores over time; full and partial bonuses (20%; 10% of capitation); range of bonus per site, $570 to $1260 Payment frequency: every 6 mo Kouides et al., 1998 RCT (2 arms); September to December 1991; 54 solo/group practices (27 intervention; 27 control) Level: provider group Type: bonus Duration: 4 mo Description: influenza immunization rate ($8 standard fee); if rate >70%, bonus of $0.80 per immunization; if rate >85%, bonus of $1.60 Payment frequency: one time (end of study)

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Access Student t-test for paired comparisons; MANOVA Student t-test: average weekly time spent in community treatment per client increased after the payment change (30.71 min vs. 38.61 min; P < 0.05) Office-based case management weekly time per client decreased (32.96 min vs. 23.31 min; P < 0.001) Total case manager average weekly time per client was not significantly different (63.68 min vs. 61.93 min) MANOVA: after the payment change, center-based treatment time decreased (F-value = 10.41; P = 0.001). The increase in community minutes had an F-value of 3.72 (P = 0.055). Program type and Medicaid status were not associated with change in time in community vs. mental health center Partial effect 2 Process Repeated-measures ANOVA Absolute increase in total mean compliance scores for intervention group from baseline was 26.3%; control group was 26.4%. No significant differences between the groups No effect 3 Process Linear regression Absolute increase in immunization rates (from 1990 [baseline] to 1991) was 6.8%; P = 0.03 Positive 3

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Rewarding Provider Performance: Aligning Incentives in Medicare Reference Study Design Incentives Hillman et al., 1999 RCT (3 arms); 1993 to 1995; 49 PC sites (19 FB+I; 15 FBO; 15 control) Level: provider group Type: bonus Duration: 18 mo Description: pediatric immunizations; well-child visits; bonuses based on total compliance score for quality indicators; full and partial bonuses (20%; 10% of site’s total 6-mo capitation for pediatric members ≤age 6 y); 3 highest-scoring sites received full bonus; next 3 received partial bonus; most improved sites received partial bonus; average bonus, $2,000 (range, $772 to $4682) Payment frequency: every 6 mo Christensen et al., 2000 RCT (2 arms); February 1994 to September 1995; 200 pharmacies (110 intervention; 90 control) Level: provider group Type: enhanced FFS Duration: 20 mo Description: $4 for cognitive services interventions (< 6 min); $6 for ≥ 6 min; cognitive services are judgmental or educational services provided by the pharmacist to the patient, such as consulting the prescriber about a suboptimal dose Payment frequency: FFS Casalino et al., 2003 Cross-sectional survey; September 2000 to September 2001; 1040 physician organizations (no patient-level data included) Level: provider group Type: better contracts with health plans; bonuses Duration: not ascertained in survey Description: not ascertained in survey Payment frequency: not ascertained in survey

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Process Repeated-measures ANOVA Absolute increase in total mean compliance scores from baseline: FB+I, 17.2%; FBO, 22.6%; control, 22.6% Differences in compliance score improvement between groups: FB+I vs. control, 5.9%; FBO vs. control, 11.3% No significant differences between the groups No effect 3 Process Student t-test Mean rate, 1.59 interventions per 100 Medicaid prescriptions (study pharmacies) vs. 0.67 (controls); P < 0.001 Positive 2 Process Multivariate linear regression Receiving better contracts for quality was associated with an increase of 0.74 CMP implemented (P = 0.007). Receiving a bonus for scoring well on quality measures was not associated with CMP implementation (P = 0.08) Partial effect 1

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Rewarding Provider Performance: Aligning Incentives in Medicare Reference Study Design Incentives McMenamin et al., 2003 Cross-sectional survey; September 2000 to September 2001; 1104 physician organizations Level: provider group Type: financial incentives; additional income; better contracts with health plans Duration: not ascertained in survey Description: not ascertained in survey Payment frequency: not ascertained in survey Roski et al., 2003 RCT (3 arms); May 1999 to June 2000; 37 PC sites (13 incentive; 9 incentive + registry; 15 control) Level: provider group Type: bonus Duration: 12 mo Description: 75% of patients with smoking status identified/documented at the last visit; 65% of patients with quitting advice documented at the last visit (targets set at approximately 15% above the average from 2 y before study); bonuses, $5000 for sites with 1–7 providers and $10,000 for sites with ≥8 providers Outcome measured: 7-d sustained abstinence from smoking (not associated with financial incentive) Payment frequency: one time (end of study)

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Process Multivariate logistic regression Receiving financial incentives from HMOs increased the adjusted odds of having a smoking cessation intervention for 6 of the 7 organizational supports (OR, 2.13 to 14.46; P < 0.038) Receiving additional income from health plans for performance on quality measures: 2 of 7 organizational supports (OR, 1.49, 1.90; P < 0.033) Receiving better contracts with health plans was not associated with supporting smoking cessation interventions Examples of organizational supports include offering smoking cessation health promotion programs and giving providers nicotine replacement starter kits to distribute to patients Partial effect 1 Process Logistic regression, clustering at the practice level Change in tobacco use status identification: incentive group had increased 14.1%; incentive + registry group increased 8.1%; control group increased 6.2%; P = 0.009 Change in providing quitting advice to patients: incentive group increased 24.2%; incentive + registry increased 18.3%; control increased 18.3%. No significant difference across the study groups The quitting rate (7-d sustained abstinence) was 22.4% for the incentive group; 21.7% for the incentive + registry group; 19.2% for the control group. No significant difference across the study groups Partial effect 2

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Rewarding Provider Performance: Aligning Incentives in Medicare Reference Study Design Incentives Rosenthal et al., 2005 CBA; October 2001 to April 2004; 163 provider groups contracted with PacifiCare Health Systems in California (provider groups in the Pacific Northwest were the comparison group) Level: provider group Type: bonus Duration: July 2003 to April 2004 (10 mo) Description: incentive payout based on provider’s groups ability to reach or exceed target rates for cervical cancer screening, mammography, and hemoglobin A1c testing for diabetic patients Incentive reward: $0.23 PMPM Payment frequency: quarterly Grady et al., 1997 RCT (3 arms); 1 year (NS); 61 community-based primary care practices (20 cue and reward; 18 cue; 23 control [total of 95 physicians]); cues were posters in waiting rooms and chart reminder stickers Level: physician Type: bonus ($50 for a 50% referral rate) Duration: 6 mo Description: “token” reward, based on the percentage referred for mammography during quarterly audit Payment frequency: 1 per quarterly audit; rewards given last 2 quarters Fairbrother et al., 1999 RCT (4 arms); July 1995 to July 1996; 60 physicians (15 bonus; 15 enhanced FFS; 15 feedback only; 15 control) Level: physician Type: bonus and FFS Duration: 12 mo Description: patients’ up-to-date coverage for pediatric immunizations Bonuses: $1000 (20% improvement from baseline); $2500 (40% improvement); $5000 (80% up-to-date) Enhanced FFS: $5 per vaccine given within 30 d of its coming due; $15 for each visit at which >1 vaccine was due and all were given Payment frequency: every 4 mo Safran et al., 2000 Cross-sectional survey; January to April, October 1996; physicians in 8 IPA/ network HMOs (2761 patients) Level: physician Type: not ascertained in survey Duration: not ascertained in survey Description: survey of health plan executives elicited information about use of financial incentives regarding patient satisfaction Payment frequency: not ascertained in survey

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Process Differences-in-differences analysis using generalized estimating equations Improvement in cervical cancer screening rates before and after the quality incentive program was statistically significant between the intervention and comparison groups (difference, 3.6%; P = 0.02). Improvements in mammography screening rates and hemoglobin A1c testing were not statistically significant Partial effect 2 Process Repeated-measures ANOVA The financial incentive arm was not significantly different from the control arm No effect 2 Process Linear and logistic regression Bonus group improved significantly in documented up-to-date immunization status, with an overall change of 25.3% (P < 0.01), but none of the other groups improved significantly compared with controls Partial effect 3 Patient experience Linear regression Financial incentives concerning patient satisfaction were related to increase in score on primary care scale completed by patients on 2 of the 4 aspects of primary care assessed (access, physicians’ knowledge of patients, clinician–patient communication, and interpersonal treatment) Access to care (β = 2.57; P < 0.01) and dimensions of comprehensiveness of care (β = 2.00 for knowledge of patient; P < 0.05) and preventive counseling (β = 3.50; P < 0.05) Partial effect 1

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Rewarding Provider Performance: Aligning Incentives in Medicare Reference Study Design Incentives Fairbrother et al., 2001 RCT (3 arms); July 1997 to July 1998; 57 physicians (24 bonus; 12 FFS; 21 control) Level: physician Type: bonus and FFS Duration: 16 mo Description: patients’ up-to-date coverage for pediatric immunizations Bonuses: $1000 (30% improvement from baseline); $2500 (45% improvement); $5000 (80% up-to-date); $7500 (90% up-to-date) Enhanced FFS: $5 per vaccine given within 30 d of its coming due; $15 for each visit at which >1 vaccine was due and all were given Payment frequency: every 4 mo Beaulieu and Horrigan, 2005 CBA; April 2001 to January 2002; 21 PCPs contracted with Independent Health in upstate New York (476 diabetic patients); 600 Independent Health diabetic patients were the comparison group Level: physician Type: bonus Duration: 8 mo Description: meeting target CS of ≥6.23; CS of ≥6.86; or overall 50% improvement in composite score. CS based on PCP’s performance of process and outcome measures for diabetes care (e.g., LDL test, dilated retinal examination, LDL cholesterol level <2.59 mmol/L (<100 mg/dL)) Incentive rewards: CS >6.86, $3.00 PMPM (Medicare), $0.75 PMPM (commercial); CS >6.23, $1.50 PMPM (Medicare), $0.37 PMPM (commercial); 50% improvement and CS <6.23, $0.75 PMPM (Medicare), $0.18 PMPM (commercial) Payment frequency: at the conclusion of the study

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Process Linear and logistic regression Both the bonus and the enhanced FFS groups improved significantly in documented up-to-date immunization status, with an overall change of 5.9% (P < 0.05) and 7.4% (P < 0.01), respectively, compared with the control group Positive 3 Process; intermediate outcome Before and after comparison, specific test not described Patients treated by physicians in the demonstration project had statistically significant improvement (final – baseline performance) on the following process and outcomes measures (P < 0.001 unless otherwise noted): second hemoglobin A1c test (25.5% difference); LDL cholesterol test (18.3% difference); diabetic retinal examination (25.6% difference); nephropathy test (37.0% difference); foot examination (45.4% difference); hemoglobin A1c level <9.5% (13.9% difference); LDL cholesterol level <2.59 mmol/L (<100 mg/dL) (10.5% difference); LDL cholesterol level <3.37 mmol/L (< 130 mg/dL) (23.5% difference); BP < 130/80 mm Hg (6.3% difference; P < 0.05). No significant improvement on performing 1 hemoglobin A1c test Partial effect 1

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Rewarding Provider Performance: Aligning Incentives in Medicare Reference Study Design Incentives Pourat et al., 2005 Cross-sectional survey; January to May 2002; PCPs contracted with Medicaid HMOs in 8 California counties with the highest rates of Chlamydia trachomatis infection and Medicaid HMO enrollment Level: physician Type: better contracts with health plans Duration: not ascertained in survey Description: HMO contracts included reimbursements for quality of care dimensions, including patient satisfaction or peer review Payment frequency: not ascertained in survey aStudy inclusion criteria were that the article must be an original report providing empirical results and the study must assess the relationship between an explicit financial incentive and a quantitative measure of health care quality. Articles were excluded if there was no concurrent comparison group, or if there was no baseline, pre-intervention analysis of the groups on the quality measure. ADL = activities of daily living; ANOVA = analysis of variance; BP= blood pressure; CBA = controlled before and after; CMHC = community mental health center; CMP = care management process; CS= composite score; CTT = continuous treatment team; FB+I = feedback and incentive; FBO = feedback only; FFS = fee for service; FY = fiscal year; HMO = health maintenance organization; ICF = intermediate care facility; IPA = independent practice association; IV= intravenous; LDL = low-density lipoprotein; MANOVA = multivariate analysis of variance; MIMS = mental illness management services; NA= not applicable; NS= not specified; OR = odds ratio; OSA = Office of Substance Abuse; PBC = performance-based contracting; PC = primary care; PCP = primary care physicians; PMPM = per member per month; RCT = randomized, controlled trial; SNF = skilled nursing facility; TCM = traditional case managers. bPositive studies were those for which all measures of quality demonstrated a statistically significant improvement with the financial incentive. Partial effect studies showed improved performance on some measures of quality but not others. Negative studies were those for which all measures of quality demonstrated a statistically significant decrease with the financial incentive. cGraded on a scale of 1 (poor) to 4 (excellent). SOURCE: Petersen LA, Woodard LD, Urech T, Daw C, Sookanan S. 2006. Does pay-for-performance improve the quality of health care? Annals of Internal Medicine 145(4): 265–272.

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Rewarding Provider Performance: Aligning Incentives in Medicare Domains of Quality Analysis and Results Overall Effectb Methodologic Strengthc Process Chi-square, logistic regression Primary care physicians reimbursed under salary and quality of care more often adhered to annual screening of sexually active females age 15 to 19 y, compared with physicians compensated by capitation and financial performance, salary and productivity, salary and financial performance, or FFS (P < 0.05) The physicians with salary and quality of care incentive also more often consistently screened women age 20 to 25 y for Chlamydia trachomatis infection annually compared with physicians reimbursed using other payment mechanisms (P < 0.05) Positive 1

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Rewarding Provider Performance: Aligning Incentives in Medicare REFERENCES Beaulieu ND, Horrigan DR. 2005. Putting smart money to work for quality improvement. Health Services Research 40:1318–1334. Casalino L, Gillies RR, Shortell SM, Schmittdiel JA, Bodenheimer T, Robinson JC, et al. 2003. External incentives, information technology, and organized processes to improve health care quality for patients with chronic diseases. Journal of the American Medical Association 289:434–441. Christensen DB, Neil N, Fassett WE, Smith DH, Holmes G, Stergachis A. 2000. Frequency and characteristics of cognitive services provided in response to a financial incentive. Journal of the American Pharmaceutical Association 40:609–617. Clark RE, Drake RE, McHugo GJ, Ackerson TH. 1995. Incentives for community treatment: Mental illness management services. Medical Care 33:729–738. Fairbrother G, Hanson KL, Friedman S, Butts GC. 1999. The impact of physician bonuses, enhanced fees, and feedback on childhood immunization coverage rates. American Journal of Public Health 89:171–175. Fairbrother G, Siegel MJ, Friedman S, Kory PD, Butts GC. 2001. Impact of financial incentives on documented immunization rates in the inner city: Results of a randomized controlled trial. Ambulatory Pediatrics 1:206–212. Grady KE, Lemkau JP, Lee NR, Caddell C. 1997. Enhancing mammography referral in primary care. American Journal of Preventive Medicine 26:791–800. Hillman AL, Ripley K, Goldfarb N, Nuamah I, Weiner J, Lusk E. 1998. Physician financial incentives and feedback: Failure to increase cancer screening in Medicaid managed care. American Journal of Public Health 88:1699–1701. Hillman AL, Ripley K, Goldfarb N, Weiner J, Nuamah I, Lusk E. 1999. The use of physician financial incentives and feedback to improve pediatric preventive care in Medicaid managed care. Pediatrics 104:931–995. Kouides RW, Bennett NM, Lewis B, Cappuccio JD, Barker WH, LaForce FM. 1998. Performance-based physician reimbursement and influenza immunization rates in the elderly. American Journal of Preventive Medicine 14:89–95. McMenamin SB, Schauffler HH, Shortell SM, Rundall TG, Gillies RR. 2003. Support for smoking cessation interventions in physician organizations: Results from a national study. Medical Care 41:1396–1406. Norton EC. 1992. Incentive regulation of nursing homes. Journal of Health Economics 11:105–128. Pourat N, Rice T, Tai-Seale M, Bolan G, Nihalani J. 2005. Association between physician compensation methods and delivery of guideline-concordant STD care: Is there a link? American Journal of Managed Care 11:426–432. Rosenthal MB, Frank RG, Li Z, Epstein AM. 2005. Early experience with pay-for-performance: From concept to practice. Journal of the American Medical Association 294:1788–1793. Roski J, Jeddeloh R, An L, Lando H, Hannan P, Hall C, et al. 2003. The impact of financial incentives and a patient registry on preventive care quality: Increasing provider adherence to evidence-based smoking cessation practice guidelines. American Journal of Preventive Medicine 36:291–299. Safran DG, Rogers WH, Tarlov AR, Inui T, Taira DA, Montgomery JE, et al. 2000. Organizational and financial characteristics of health plans: Are they related to primary care performance? Archives of Internal Medicine 160:69–76. Shen Y. 2003. Selection incentives in a performance-based contracting system. Health Services Research 38:535–552.