Douglas Conrad , Pro fessor o f Hea l th Serv i cesUn ivers i t y o f Wash ington

Depar tment o f Hea l th Serv i ces&

Phi l l ip HaasNetwork Market Head – Nor thwes t Market

Aetna L i fe Insurance Company

May 26 , 2011

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Payment Models for Shared Decision Making: Systematic

Review and Recommendations

Purpose of This Session2

To evaluate the rationale for financial incentives in support of shared decision-making (SDM) and use of patient decision aids (DAs) - based in relevant theory and empirical evidence

To position the financial incentives for SDM and use of DAs within the larger context of fundamental payment reform in health services

To craft recommendations for payment models that support SDM and DAs without generating adverse, unintended consequences

Rationale for Financial Incentives in Support of SDM and Use of DAs

Formal systematic evidence review based on 55 randomized controlled trials (O’Connor et al. 2009) concludes that patients involved in SDM are: Relatively better informed Less likely to be undecided about course of treatment More likely than their doctors to defer or decline surgery

- with no measurable adverse effect on health outcome or satisfaction

(Marshall 2011)Potential exists to reduce healthcare costs, but

little evidence to date

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Rationale for SDM/DA Financial Incentives (continued)

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Promoting SDM/DA is consistent with improving “value” Enhanced appropriateness of treatment choices Improved clinical quality through better concordance of

treatment choices with patient preferences and values Potentially reduced use of expensive, invasive procedures

Major barriers to SDM/DA implementation are:(Legare et al. 2008)

Time constraints: Proper SDM/DA incentives might mitigate this factor

Lack of applicability due to patient attributes Clinical contingencies and situation

Rationale for SDM/DA Financial Incentives (continued)

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Principal facilitators of SDM/DA use are: (Legare et al. 2008)

Provider motivation Flowing SDM and use of DAs to positively impact the

clinical process Improving patient outcomesProperly designed SDM/DA financial incentives (direct

and indirect) could positively influence provider motivation and patient outcomes

Positioning SDM/DA Financial Incentives

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Larger Context of Health Care Payment Reform:Moving beyond FFS:

Some add-on FFS codes for SDM/DA use may be appropriate as a transitional strategy (recognizing potentially increased length of consultation)

5-year window seems likely for CMS experimentation with different payment models (MedPAC 2010; PPACA) Bundled payment for episodes of care (with a possible “warranty”) Comprehensive pmpm payment for care (e.g., global or

professional capitation) Risk-adjustment is a requisite for fairness & efficiency

“Value-based” payment and purchasing models are most promising Payment for “results”, not activity

Positioning SDM/DA Financial Incentives (continued)

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Need for a next generation of more robust provider pay-for-performance (P4P) programs

Learn from the existing evidence regarding optimal structure and power of incentives

Look for fundamental, embedded change rather than incremental adjustments at the margin

Positioning SDM/DA Financial Incentives (continued)

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Incentive power should be greater with:(1) Optimal size (getting to the ‘sweet spot”)(2) Provider controllability (greater with

process indicators)(3) Absolute (rather than relative) performance

standards(4) Downside risk (penalties and/or withholds),

in addition to rewards: tap “loss aversion”

Positioning SDM/DA Financial Incentives (continued)

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Incentive power should be greater with:

(5) Involvement of stakeholders and clinical professionals (for credibility and sustainability)

(6) Individual-level focus, as compared to group levelCaveats:

Health care, and especially shared decision-making, is a “team sport”

Group-level incentives are important for supporting clinical infrastructure, as well as the culture of the practice and the care team

(Conrad and Perry 2009)

Positioning SDM/DA Financial Incentives (continued)

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SDM/DA incentives are best when integrated within the care of the patient over time: SDM/DA reflects a stronger commitment to the “co-

production” of health ( Salzburg Global Seminar 2011) SDM … “is a concrete manifestation of a more

substantial social process – the re-conceptualization of the roles and responsibilities of patients and health professionals in improving health.” (Marshall 2011)

In that spirit, incentives could also further embed SDM/DA within the informed consent process Note the WA state law which offers statutory

encouragement, but not financial incentive per se for SDM/DA use

Positioning SDM/DA Financial Incentives (continued)

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PPACA has two particularly relevant provisions for SDM/DA use:1) Section 3506 establishes priority of setting quality

standards for certifying DAs (National Quality Forum likely would play this role.)

o Funds authorized, but not yet appropriated

2) Section 3021 establishes the CMS enter for Medicare and Medicaid Innovation

o Funds authorized and appropriated ($5 million in 2010; $10 million per year in 2011-2019)

Positioning SDM/DA Financial Incentives (continued)

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MedPAC (2010) has highlighted the potential role of financial incentives and payment reform for enhanced use of SDM/DAs1) The move toward accountable care organizations

(ACOs) has potential to tie SDM/DA use as a clinical accountability criterion within payment arrangements for preference-sensitive conditions

2) FFS “add-on” codes for lengthened visits can be used when ≥ ½ the visit is for counseling: documentation is required and must include a time estimate, specific clinical condition, and nature of what was discussed

Used mostly by surgeons, oncologists, nephrologists, and other specialists

Positioning SDM/DA Financial Incentives (continued)

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More MedPAC highlights Requirement for documented use of SDM/DA for participation in

recognition or incentive programs: For example, BCBS stipulates SDM/DA use by facilities seeking “Blue

Distinction” for spinal surgery and hip or knee replacement surgery Consideration of requirement (Schoen 2007) that providers of

some Medicare FFS-reimbursed services (coronary revascularization for angina or lumbar spine surgery for low back pain): Provider would be held accountable for patient compliance Failure to perform SDM/DA would trigger 10% payment reduction CMS would have to define criteria for decision aid quality

Massachusetts Alternative Quality Contract is a Potentially Promising Incentive Structure: Performance-based Payment Increases over Time (Chernew et al. 2011)

Positioning SDM/DA Financial Incentives (continued)

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Reflections on Incentives for SDM/DA Use from WA State Demonstration:

Conducted key informant interviews with health plan leaders and one major public purchaser and also interviewed the project managers at all three WA SDM/DA participating demonstration sites

Addressed not only payment and financial incentives for SDM/DA use, but also: Specific strategies and steps for increasing patient

engagement Distribution and pricing of DAs

Positioning SDM/DA Financial Incentives (continued)

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Additional Findings from key informant interviews: DAs are generally being distributed free to patients on the

web, as part of a visit, or mailed (contract negotiations with vendors)

Payers will look for value improvements in care and results to sustain the financial feasibility of SDM/DA use

Some questioning of a vendor “1-800 coach” approach Integrating SDM/DA within a prepaid group practice,

capitation payment model, coupled with salaried physician compensation, is a particularly favorable approach and economic environment for facilitating SDM/DA use and avoiding certain economic disincentives (e.g., potential loss of FFS income from remunerative procedures)

Positioning SDM/DA Financial Incentives (continued)

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Payment Models in Use within Payers & Purchasers & Relevance for SDM/DA Use Plans are not directly paying FFS for DA codes or SDM in care

processes at this time Plans and self-insured employer-purchasers lean toward paying for

outcomes, not activity Organized purchasers see their role as enablers of enrollees,

using such tools as: 1) Web-based information bases that enhance health literacy and

knowledge of treatment options for specific clinical conditions2) Tools that promote transparent price comparisons for most common

procedures and defined episodes of care3) Narrowed provider networks that use tiered cost-sharing to incent

choice of relatively efficient and high quality providers4) Value-based insurance design to incent choice of more cost-effective

and evidence-based health services

Positioning SDM/DA Financial Incentives (continued)

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Health Plans and Purchasers are crafting a variety of complementary and facilitating approaches to patient engagement that do not pay for SDM and DA use explicitly, but that support the conditions for robust shared decision-making by members

Such tools include: Built-in web-based calculators for costing out

alternative treatment scenarios (i.e., supporting “what-if” analyses

Use of member, claims, pharmacy, and health risk assessment data to stratify enrollees into subgroups of “readiness to engage” or to identify systematic gaps in care

Recommendations for Payment Models & Incentives to Support SDM and DA Use

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Development of ACOs offers solid opportunity to transform payment into risk-adjusted capitation models

Virtual ACOs must offer stronger informational and infrastructure supports and experiment with individual incentives to motivate SDM & DA use equivalent to that achievable within vertically integrated ACOs

Transitional forms include bundled payment per episode of care – with warranties of improved outcome and/or limited payment for avoidable complications:

Example of “evidence-informed case rates”Prometheus Payment (DeBrantes & Rastogi 2008)

Shared savings incentives offer a more global incentive, but need downside risk for motivation Avoid what Berenson (2011) refers to as the “bridge to nowhere”

Payment Model Recommendations for SDM & DA Use

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Avoid overpayment in any payment schema: Concern is crowding out intrinsic motivation by trying to

extrinsically incent behavior that inherently demands internalization and re-socialization of a new process of decision-making

Emphasize payment incentives that are “aligned with” shared decision making processes that are being encouraged, rather than using high-powered payment schemes that implicitly “force” the behavior being sought

Use complementary patient financial incentives (value-based cost-sharing and plan designs) that encourage shared-decision-making

Insurer Perspective on SDM/DA

Insurers share the vision for improving the effectiveness and efficiency of care but are exploring other pathways that involve working separately with patients and providers in a broader context: Aetna’s ACO provider strategy focuses on providing tools

for clinical decision support (Active Health Management) and health information exchange (Medicity) that can help providers manage population health by finding targeted patients and engaging them at the ACO/system, physician, and member levels to support their own care and wellness.

Aetna’s consumer strategy is to provide tiered networks and website applications that enable members to compare alternative treatments and to select the most effective/efficient providers (Aexcel, Choose & Save, and member payment estimator with physician and procedure price transparency). We are moving these from desktop/laptop to mobile phone platforms.

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Insurer Perspective on SDM/DA

Insurers are beginning to apply new reimbursement methods as we begin to move from fee-for-service (with or without adding codes for SDM/DA use) toward bundled payments for episodes of care and ultimately capitation. In this market we have had good experience collaborating

with multispecialty groups using scorecards as the basis for future reimbursement increases by rewarding the achievement of specified targets such as systematic reporting of laboratory results, improving responses to system-generated care considerations, increasing use of electronic precertification, and increasing generic prescribing and formulary compliance.

We offer similar rewards to hospitals – e.g. “warranties” for readmissions within specified time periods of up to 30 days.

We could add SDM/DAs to these scorecards.

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