The Role of Pay for Performance in Shaping the Quality and Safety of

Health Care

Peter W Carmel MD, D Med Sci Professor and Chairman

Department of Neurological Surgery The New Jersey Medical School

Newark, New Jersey

AMA Efforts for Quality Improvement and Patient Safety

• Almost a quarter-century of policies supporting evidence-based performance measures

• Founding supporter of the National Patient Safety Foundation (1997)

• Convened and staffed the Physician Consortium for Performance Improvement since 2000

• The AMA has spent over $ 13 million in support of the Consortium

• Now almost 30 staff (full and part time) on quality improvement activities

Physicians Consortium for Performance Improvement

• More than 100 Specialty and State Societies • Council of Medical Specialty Societies (CMSS)• American Board of Specialty Societies (and

Member Boards)• Experts in methodology and data collection• Agency for Healthcare Research and Quality

(AHRQ)• Centers for Medicare and Medicaid Services

(CMS)

• Developed 184 clinical performance measures (on 27 clinical topics)

• 65 measures endorsed by NQF• 93 approved by the Ambulatory Care Quality

Alliance (AQA)• Developed 47 of 74 measures in the CMS

Physician Quality Reporting Initiative (PQRI), 12 others with

Specialty Societies

Physicians Consortium for Performance Improvement

Observing performance measures (and increased use of HIT) will enable MDs to manage the details of complex care in an orderly fashion

Use of these measures will improve patient care

Performance Measures – Expected Improvement

The Members of Congress I have talked to almost uniformly believe that –

P 4 P = Cost Control

What (or Who) is Driving Pay for Performance?

Integrated Healthcare Association

• Six of southern California’s largest health plans*• More than 200 physician groups• Nearly 7 million enrollees

Payments• $50 to 60 million last year• Average group payment - $200,000• Divided by 24,000 primary care physicians ($2500/MD) *Aetna, BC, BS, Cigna, Healthnet, Pacificare Health

Principles for P4P (HOD – June 2005)

• Ensure quality of care. • Foster physician-patient relationship.

• Offer voluntary participation. • Use accurate data and fair reporting.

• Fair and equitable incentives.

Pay for Performance – Reality Check

• Pay for performance may save (Medicare) money, but not on the Part B side

• Performance measures provide more care to patients, not less

• If Part B spending increases, there would be additional MD pay cuts under the SGR

P4P and SGR are inconsistent concepts!

• By better managing potentially costly conditions in the MD’s office,

hospitalizations may be prevented or shortened, a saving to Part A

• Savings from P4P would go to Medicare, carriers, or hospitals

• Payments to physicians may actually decrease

Pay for Performance – Reality Check

• Almost all P4P plans rely on HIT• • Physician cost for a national health information

network is est @ $22.2 billion*

• Savings from increased use of HIT will not benefit physicians financially in the short term

* Kaushal, R et al; Ann Intern Med: Aug 2005

Pay for Performance – Reality Check

Pay for Performance – Early Success

Integrated Healthcare Association (2003) 150,000 additional women received

cervical cancer screenings 35,000 more women screened for breast

cancer 10,000 more children received two

indicated vaccinations 18,000 more people tested for diabetes

Pay for Performance – Disappointing Reality Check *

• Two areas within Pacificare – both with improvement guidelines – one with P 4 P

• Screening programs – cervical ca mammography, hemoglobin A1c

• Little or no improvement with payment

• More than 75% of reward went to groups that were above payment line at the start !

*Rosenthal M et al – JAMA 294: 2005

Pay for Performance – Disappointing Reality Check

• Payment may result in little real improvement• Groups that start ‘behind’ may get no reward

for real improvement• Groups that start ‘behind’ are more likely to

have high proportion of Medicaid, charity care

• P 4 P may serve to transfer money from ‘poor’ to ‘rich’ groups

Pay for Performance – Disappointing Reality Check

Medicare Physician Group Practice Demonstration• Ten selected groups (of 26), reporting 10 measures for

diabetics – told they would share in savings – launched 4/2005, reported 7/2007

• Later told savings would need to be >2% for payment• Almost all groups improved performance to 90% level• 9/10 groups saved money• Only 2 groups got paid*; 80% got nothing, including one

who achieved >90% on all measures

* Forsyth Medical, Winston-Salem * * Marshfield Clinic, Wis

EMR – Early Successes*

• Review of 257 separate studies• HIT increased adherence to protocol-based

care; esp with preventive measures• Both infections and adverse drug events were easily

identified and studied• Utilization rates for lab and x-ray testing were

decreased• Limitation – results largely from four bench-

mark institutions

Chaudhry B et al: Ann Intern Med 144 - 2006

• Introduced with expectation of cost savings ($77 B)• High start-up cost ($44,000 /MD)• EHRs in less than 20% of MDs offices, slow growth• Sold to MDs for better “capture of charges”• Little or no effect on asthma or angina management,

interventions for heart disease and failure, diabetic glucose control **

• Physicians doubt the EHR’s quality proposition

* Siderov J, Health Affairs: 25, 2006 ** BMJ: 2002, J Amer Inform Ass: 2005, Ann Fam Med 2005

Electronic Health Record – Disappointing Reality Check *

• Cross-sectional analysis of visits based on NAMCS data (2003, 2004)

• No over-all advantage of EHRs on 17 quality indicators

• Non-EHRs actually did better in 2/17 areas• “A more sophisticated record is needed to

improve quality of care”

* Linder JA, Bates DW, et al – Arch Int Med: July 2007

Electronic Health Record – Disappointing Reality Check *

What is the Future for P 4 P?

• In the short term P 4 P will increase costs• The size of long-term cost reduction (if any)

has not been determined• CMS will proceed with PQRI, but Dems may

not fund beyond next year • Private payers may continue current plans

but are seeking greater cost cuts• New programs seek “efficiency” and

“value-production” – but are aimed at cost reduction

The Term “Efficiency”

“Health economists define efficiency as a measure of relative resources required to achieve a given level of outcome — e.g., absence of pain,

restoration of mobility. However, when payers and purchasers speak of efficiency, they tend to focus on the costs of resources for a specified set of services, without explicit reference to outcomes.”

*Source: J. William Thomas, PhD, (Institute for Health Policy, Muskie School of Public Service, University of Southern Maine) Economic Profiling of Physicians - 2006

Measuring “Efficiency”Using Grouper Methodology

3 Grouper Methodologies

All use episodes of care

An Episode of Care

An episode of care is defined as a period during which a disease process is present and is being managed – diagnosed and treated – by health care providers.

(Length of episode is not specified)

Efficiency Measurement: How Is It Done?

1. Claims are processed through episode-grouper software (Medstat; Symmetry; Cave Consulting).

2. An actual cost figure is calculated for each episode by summing allowed amounts of all

claims included in the episode -- includes physician services, inpatient and outpatient services, prescriptions and laboratory.

Efficiency Measurement: How Is It Done?

3. Attribution is given to physician/provider. 4. An expected cost is calculated for a defined

episode (usually average actual cost of all episodes of the same type).

5. Efficiency measure is calculated for each physician/provider.

Efficiency Measure Attributable to a Physician

Ratio: Actual CostsExpected Costs

Desired Score: Less than 1 1 = Average

Problems with “Efficiency” Measures

• The “n”• Physician Attribution• Patient Demographics and Compliance• Co-morbidities and Severity of Illness• Process not transparent to provider• Physicians wary of intent

• Physicians may view efficiency measures as solely related to cost – having nothing to do with patient safety or quality of care

• Physicians are less likely to participate if “efficiency measures” are felt to be merely economic credentialing

Intent May Not Be Clear

Tiered or Narrow Networks

• Alternative to Pay for Performance

• Focused on Healthcare Costs

• Seek least expensive providers

• Use differential payments to ‘steer’ patients

Tiered Networks

In-Network PhysiciansEfficiency

Measures

Low Cost Network

Average Cost Network

High Cost Network

Narrow Network Lawsuit (Settled Aug 8, 2007)

• Regence Blueshield creates “Select” network (urged by Boeing)

• Employees complained – many of their MDs not covered

• Sued by 6 MDs, WSMA, AMA – claim Regence defamed doctors; reviewed only insurance claims, not medical records

• Regence withdraws network, agrees to MD appeals, WSMA input into future standards, advance

notification to MDs, undisclosed sum into WSMA Education Fund

“Cost” is NOT Just A Four-letter Word

• All efforts to improve quality and patient safety will be impacted by ‘cost’; can not be ignored

• We can not ignore ‘cost’ in introduction of new methodology and technology

• We can not ignore ‘cost’ in teaching of students and residents

• Congress will limit growth of ‘cost’ (% of GDP)• Public must be engaged in this discussion, and

understand that cost-cutting may lead to decreased services and less

access to care

The Rising Cost of Technologyor

The Case of the Aching Back

Most expensive health problem for ages 30 – 50

Each year 15 to 20 % of adult population has back pain problem

Over 2 % of workforce incurs back injury each year

Cost to industry estimated at $ 75 to 150 billion yearly

Nearly 1/3 of asymptomatic patients have “abnormal” MRI – Most common dx – degenerative disc disease

The Case of the Aching Back

PLIF – Posterior Lumbar Interbody Fusion *

• Operation done for degenerative disc disease

• Disc is removed, bone (or device) placed between vertebral bodies to create

fusion

• Fused vertebra don’t move on each other, resulting in pain relief

** * Courtesy of John A Wilson, MD, FACS

PLIF Evolution - 1994

22630 PLIF $1484 20938 Structural Bone autograft 198

$1682

* Courtesy of John A Wilson, MD, FACS

CPT Operation Medicare

• Dramatic increase in utilization – from mid-90s

• Neurosurgery most common provider

• Significant technological advancements

• Expensive technology

PLIF – Posterior Lumbar Interbody Fusion *

* Courtesy of John A Wilson, MD, FACS

• 22630 PLIF $1484• 22851 Intervert prosthetic device $ 438• 20937 Morselized autograft $ 181• 22840 Non segmental fixation $ 827• $2930• Hospital Charges for construct

– $4952-$6922– Cage device $2475-$5101 X 2 = approx $7500– BMP $3590-$4990 average approx $4000

• Total Approx $19,000

PLIF Evolution - 2007

* Courtesy of John A Wilson, MD, FACS

PLIF Evolution• Physician payment

-$1682 evolved to $2930 74% increase

• Cost of implants (hospital) plus surgeons reimbursement

-$1682 evolved to $19,000

Increase greater than 1000% (!)

* Courtesy of John A Wilson, MD, FACS

Have the results improved ?

Have the results improved by a factor of 10 ?

Have we improved the value of our surgery ?

Value = Improved Health Outcomes Costs

* Porter & Teisberg JAMA 297: 2007

Principles to Guide Change in Healthcare *

Principles to Guide Change in Healthcare *

1) The goal is value for patients – for ethical reasons

2) Care should be organized around medical conditions and care cycles

3) Results (outcomes) must be measured4) Results reported as risk-adjusted outcomes

and costs –

* Porter & Teisberg JAMA 297: 2007

Principles to Guide Change in Healthcare

Costs in the current system are largely hidden from physicians – who know only what they charge

Physicians rarely know what they will be paid

Physicians do not know the cost of the care episode

Those who know total costs regard this information as proprietary and are reluctant to share their data

There is little reliable outcomes data

Principles to Guide Change in Healthcare *

Physicians must lead in the development and use of outcomes measures

Physicians need good cost information for the full care cycle

If physicians do not demand the information needed to improve themselves, programs dictating how they should practice will continue to proliferate

* Porter & Teisberg JAMA 297: 2007

The Virginia Mason HealthSystem/Aetna Experience*

*Case Study: HBS – Bohmer, R & Ferlins, E - Sept , 2005

v

Courtesy: Gary Kaplan, MD , CEO Virginia Mason Healthcare System

But -

Since MRI was most profitable item for Virginia Mason, decrease in # of MRIs caused

system to lose money on new program

Aetna increased payments to PCP, back MD, and for physiotherapy

Healthcare Attitudes Old

New

Courtesy: Gary Kaplan, MD , CEO Virginia Mason Healthcare System

Caveat !

Those who don’t directly care for patients –

May not be aware of best ways to safely cut waste May not be able to evaluate the impact of new,

expensive, possibly progressive technology

May have great difficulty in the implementation of change

Physician leadership will be required

Improving Performance

“ the scientific effort to improve performance in medicine, as we have seen with hand-washing, wounded soldiers, child delivery – an effort that gets only a miniscule portion of scientific budgets – can arguably save more lives in the next decade than bench science, more lives than research on the genome, stem cell therapy, cancer vaccines, and all the other laboratory work we hear about in the news.”

Atul Gawande - 2007

Outcomes Measurement

The Apgar score is practical and easy to calculate

Measures obstetrical performance with a common standard

Allows clinicians immediate feedback on effectiveness of their therapy

It means seeking reliability over the occasional perfect performance

Measure outcomes !

Much better than measuring performance

Much, much better than measuring only cost!!

Conclusions

• Every physician wants to give quality care, utilize HIT, be more efficient

• Use of performance measures and HIT is not “cook-book” medicine

• It is an orderly way to organize complex care• Use of performance measures will likely raise

quality of care, improve safety• Degree of improvement is not yet clear • We must measure outcomes

• P4P has been successfully used to improve some primary care (IHA)

• P4P (and EMR) allow greater adherence to protocol-driven healthcare

• Improvements in both quality and patient safety are possible

• The AMA P4P principles are a guide for the participation of physicians

• Much of the positive data on P4P comes from a few bench-mark institutions

Conclusions

• Is P4P better than performance measures alone ?• Is EMR necessary for P4P ?• Is P4P applicable to solo and small group practices ?

• Neither P4P or use of EMR will lead to significant cost-reduction in the foreseeable future

• Is there a future for P4P? or . . . what ?

Conclusions

Conclusions

• There is (as yet) no program that has been shown to allow P4P for physicians in every specialty in a usable, equitable manner

• Programs should pay for improvement in performance, not limited by cost control

• Programs should pay for improvement, not limited to a given standard

• Groups that improve should not be penalized to pay for ‘top’ performers

Conclusions

• Improvement in quality and patient safety is the goal• ‘Cost containment’ is going to be necessary, but will

not improve quality or safety• Bureaucrats should not practice medicine• Physician input will be required• For physicians to ‘buy in’, the goal must clearly be

improvement in quality and safety• If P4P is to succeed, the process must be

transparent, fair, and minimize reporting burden

“. . .better is possible. It does not take genius. It takes diligence. It takes moral clarity. It takes ingenuity. And above all, it takes a willingness to try”

Atul Gawande - 2007