Rewarding Provider Performance Aligning Incentives in Medicare (2007) / Chapter Skim
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2 The Promise of Pay for Performance
2 The Promise of Pay for Performance
Pages 32-59
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From page 32... ...
. These systems place little emphasis on achieving high clinical quality, do not reflect the value of services, frequently act to drive up costs, and do not encourage patient-centered care or the efficient use of resources.
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From page 33... ...
Medicare's rates and fees do not vary with the quality of the service provided. Furthermore, the fee-for-service payment structure generally does not provide reimbursement for health services that are recognized as important contributors to quality, such as comprehensive case management, care coordination, health counseling, and many preventive services that may reduce the need for hospitalization or more expensive future medical procedures.
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From page 34... ...
Prospective payment was first introduced in inpatient acute care hospitals in 1983. Since then, CMS has instituted prospective payment for other provider settings, including skilled nursing facilities in 1998, home health agencies in 2000, and
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From page 35... ...
The discussion there is intended to give a broad overview of payment methodologies, not a detailed picture of all the complexities of each method, to provide a context for the consideration of payment incentives. Table 2-1 presents an overall picture of spending in the Medicare program by provider setting.
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From page 36... ...
In fact, it can prove to be counterproductive, exacerbating current problems and creating new ones. The Theory Behind Pay for Performance In essence, pay for performance represents an attempt to align incentives in the payment system so that rewards are given to providers who foster the six quality aims set forth in the Quality Chasm report (IOM,
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From page 37... ...
Effects of Medicare Payment Systems on Provider Behavior Evidence that providers have responded to changes in Medicare payment policies in the past suggests that health care providers will likely change their behavior in response to Medicare payment incentives to improve quality. The implementation of various Medicare prospective payment systems has been associated with significant changes in provider behavior.
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From page 38... ...
Early Experiences with Pay for Performance Public-Sector Efforts CMS has undertaken several Medicare pay-for-performance initiatives for different provider settings. Some of these initiatives are in the planning phase; others have recently been implemented.
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From page 39... ...
Private-Sector Efforts In the past several years, numerous employers, purchasing coalitions, and health plans have announced new efforts to reward health care quality. Estimates suggest that more than 100 individual pay-for-performance efforts are currently under way (Med-Vantage Inc., 2006)
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From page 40... ...
Overall ratings of care 5. Care coordination Information 1.
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From page 41... ...
. Anthem Blue Cross and Blue Shield of New Hampshire's plan pays bonuses based on a variety of measures that assess appropriate primary and secondary prevention, including screening for breast, cervical, and prostate cancer; screening of patients with coronary artery disease for high cholesterol; and provision of retinal exams for diabetic patients.
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From page 42... ...
A program in East Kent from 1998 to 2000 defined disease management targets that practitioners had to meet or repay funds. Both of these programs required new money initially; however, the first created incentives for efficiency savings, while the second relied on a reverse withhold to encourage quality improvement.
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From page 43... ...
Many quality improvement investments involve fixed costs, such as those for information technology or training, whose benefits will accrue to all patients. In addition, the added market power of Medicare will magnify the importance of the existing pay-for-performance programs of health plans and may have further positive spillover effects if other payers follow the lead of CMS in payment reform, as was the case with prospective payment systems.
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From page 44... ...
Such an assessment was beyond the scope of this study. Other nonfinancial mechanisms, such as public reporting, benefit redesign, and professional and public education, are also critical components of a farreaching quality improvement strategy.
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From page 45... ...
The need for measures for use in evaluating, and ultimately rewarding, the coordination of care is necessary to quality improvement with regard to both monitoring gains in clinical quality and reducing inefficiencies. For example, improved coordination of care management could potentially result in a reduction in hospital admissions (Rich et al., 1995; Bodenheimer, 1999; Bodenheimer and Fernandez, 2005)
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From page 46... ...
. Indeed, one study that examined clinical quality of hospital care for acute myocardial infarction found that performance on process measures accounted for only 6 percent of the variation in 30-day mortality rates (Bradley et al., 2006)
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From page 47... ...
Second is whether financial rewards by themselves can change practice, or other quality improvement initiatives must be implemented as well to achieve positive results (Beaulieu and Horrigan, 2005; Rosenthal et al., 2005b)
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From page 48... ...
While providers for the most part have the best interests of their patients in mind, such unintended adverse consequences may be a real concern. Table 2-3 is a nonexhaustive listing of some of these potential unintended adverse consequences, each of which is reviewed below.
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From page 49... ...
49 of to of to private Shifted Costs Shift costs the sector Shift costs consumers in other Forestalled Reform Efforts Ignorance of possible reform efforts Stalled progress quality agenda in providers Demoralized Workforce Withdrawal of from Medicare Stalled progress quality agenda Performance for of of practices Pay Impeded Knowledge Transfer and Innovation Decreased sharing best and misadventures Slowed uptake nonmeasured practices of to or Care of of from Consequences care of measure Marginalized Comprehensive Integrated Promotion management the condition Diversion resources nonmeasured areas Adverse to of for Unintended Increased Disparities Creation incentives tiering Disadvantage undercapitalized practices Potential 2-3 or of for of TABLE Decreased Access Denial high-risk noncompliant patients Creation unmet demand "successful" providers
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From page 50... ...
. At the same time, however, there is concern that the public reporting of provider performance could have unintended adverse consequences.
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From page 51... ...
The present report articulates the need for measures that reward three key domains of care: clinical quality, patient-centeredness, and efficiency. As noted earlier, a single-minded focus on clinical quality can lead to increased health care costs through overuse of services.
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From page 52... ...
. A separate compelling concern is that pay for performance could inadvertently stifle long-term innovation by shifting the focus of quality improvement exclusively to the achievement of short-term goals.
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From page 53... ...
This is not meant to imply that the implementation of pay for performance should proceed without caution, but to emphasize that the possible unintended adverse consequences should not hinder progress. Shifted Costs Assuming the pay-for-performance program will involve a reduction in base payments (see Chapter 3 on use of existing funds)
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From page 54... ...
Conclusions Quality improvement is a continuous and dynamic process; caution in the design of pay-for-performance programs is necessary to ensure that successful programs do not foster the development of a new status quo-one that is better, but incomplete. Overall, any pay-for-performance program must be designed as a learning system that will allow for modifications in response to feedback obtained, including unintended positive consequences.
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From page 55... ...
In this sense, the committee envisions that as pay for performance evolves, shifts should occur from rewarding process measures toward rewarding outcome measures, and from rewarding by setting toward rewarding by health condition. Initial pay-for-performance programs will be limited by the availability of reliable measures and the structure of the current payment system.
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From page 56... ...
2005. Putting smart money to work for quality improvement.
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From page 57... ...
IOM 2006a. Medicare's Quality Improvement Organization Program: Maximizing Potential.
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From page 58... ...
general practitioners -- An am bitious U.K. quality improvement initiative offers the potential for enormous gains in the quality of primary health care.
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From page 59... ...
2003. Rehabilitation therapy in skilled nursing facilities: Effects of Medicare's new prospective payment system.
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