|
In this month's piece we briefly examine the efforts
of health plans and employers to improve the quality
of care by using financial incentives to reward providers
for their performance.
The movement to measure and improve quality has become
more prominent in health care over the past few years,
spurred by two reports from the Institute of Medicine:
"To Err Is Human: Building a Safer Health System"
in 1999 and "Crossing the Quality Chasm: A New
Health System for the 21st Century" in 2001. Purchasers
and payers have begun promoting quality by designating
funds to be paid out contingent upon meeting certain
defined standards. The standards vary in different arrangements,
but are comprised of a mixture of administrative services,
clinical quality measures, access to services, and member
satisfaction scores.
Performance incentives can overcome the limitations
of financing arrangements in our health care system,
which are focused on the costs of care rather than the
quality of care. In risk-sharing reimbursement, including
capitation, providers typically receive no reward for
achieving higher quality outcomes. At the extreme, capitation
can create perverse incentives to actually withhold
appropriate care in order to minimize expenses. Another
important factor is that some elements of quality, such
as lowering cholesterol level or screening for prostrate
cancer, potentially generate cost savings only in the
long-term; the patients may switch health plans and
providers, so the current parties have little incentive
to deliver these services.
Some purchasers and insurers are attempting to remedy
this conundrum by developing a robust system of "pay
for performance" financial incentives. They are
looking at specified services and outcomes, including
clinical and preventive measures drawn from Health Plan
Employer Data and Information Set (HEDIS) as well as
scores from patient satisfaction surveys. Perhaps the
most significant factor in the success of these new
"pay for performance" arrangements is that
the bonuses will be large enough-up to 10% of a physician's
base annual reimbursement-to truly influence physician
behavior.
Employers
Employer coalitions, rather than single companies,
have been at the forefront of incorporating risk in
the form of performance-based targets into their contracts
with health plans. Examples include the Chicago Business
Group on Health, the Colorado Business Group on Health,
Gateway Purchasers for Health (based in St. Louis),
and the Pacific Business Group on Health. In a standard
version of the contract, 2 percent of the premium or
20 percent of the administrative fee is put at risk.
In essence, this arrangement creates a potential penalty
for failing to meet targets, instead of rewarding health
plans with additional pay for high quality outcomes.
The argument is that incentives should not be given
for quality care that the purchasers should reasonably
expect to have provided in any event.
Still, there are some employers and coalitions that
are developing financial incentives that reward providers
with extra pay for achieving high-quality outcomes.
In January 2001, General Motors and the University of
Michigan Health System developed a new initiative called
Activecare in which GM directly reimburses providers
for performing patient health risk assessments. Activecare
will also reward provider groups with a year-end bonus
for meeting target rates for a number of services and
processes. As another example, in early 2001 the Tri-Rivers
Healthcare Coalition in Dayton, Ohio, established a
quality council comprised of purchasers, providers,
health system representatives, and consumers to determine
which provider performance areas should be targeted
with newly-offered financial incentives to improve patient
outcomes.
Health Plans
Defining the quality of care that a physician provides
and paying them accordingly is a relatively new idea
for health plans. It is difficult to implement, in part
because quality incorporates such a wide-ranging list
of variables, from patient satisfaction scores to clinical
outcomes. Historically, health plans have focused on
items that can be easily measured, such as the Health
Plan Employer Data and Information Set (HEDIS) survey
results and scores on access and satisfaction from patient
surveys. Health plans have then attempted to incorporate
these ratings into physicians' bonuses.
The methodology of factoring quality outcomes into
physician payment schemas is often insufficient to achieve
changes in physician behavior. However the following
examples demonstrate how some health plans are striving
to change physicians' behavior by offering a significant
financial incentive for high-quality outcomes:
- Integrated Healthcare Association (IHA) of California,
"Pay for Performance" program: Six of the
largest health plans in California-Aetna, Blue Cross
of California, Blue Shield of California, Cigna, Health
Net, and PacifiCare-have agreed to use a common scorecard
to measure physician group performance and reward
them financially. The proposed performance measures
for the scorecard are compromised of the following
weighting system: 50% for clinical outcomes, 40% for
patient satisfaction, and 10% for information technology
usage. The amount and nature of the performance award
will be left to the discretion of the individual health
plan, but IHA recommends significant bonuses. The
Pay for Performance program is schedule to be fully
operational by January 2003.
- Independent Health Association, Buffalo, New York:
Independent Health has developed a quality bonus based
upon five measures: patient satisfaction scores, emergency
room utilization, service access, mammography rates,
and colorectal cancer screening rates. Physicians
can receive an additional 20 cents per member per
month (PMPM) for average performance and 30 cents
PMPM for high performance.
- Hawaii Medical Service Association (HMSA), Hawaii:
HMSA, the state's Blue Cross and Blue Shield Plan,
has offered a year-end bonus to both generalists and
specialists in its preferred provider organization
(PPO). The bonus can equal up to 5.5% of providers'
annual billings, with a $12,500 maximum cap. Most
of the bonus-70%-is tied to a combination of clinical
and patient satisfaction scores; the remaining 30%
is tied to changes in administrative processes, filing
electronic claims using an Internet eligibility system,
and participating in other HMSA products.
Government Agencies
Public purchasers, including the federal government
and various state governments, have lagged behind in
the use of financial incentives to promote quality improvement.
The strict legal and financial provisions of Medicare
and Medicaid legislation and difficulty in coordinating
care among Medicare and Medicaid enrollees makes it
extremely difficult to for public purchasers to provide
extra pay for providers that are based upon high-quality
outcomes.
MCOs involved in the Medicare + Choice and Medicaid
programs have only recently implemented disease management
programs to improve the quality of outcomes. No financial
arrangements have been made between MCOs and providers
within these programs to directly link outcome targets
to financial reimbursement. Instead, providers are just
often paid an extra amount per member per month to monitor
and provide care for patients enrolled in the disease
management programs.
Conclusions
As health care costs continue to climb, purchasers
will increasingly look for new ways to ensure that their
increased health care outlays will result in healthier
patients and greater patient satisfaction. One of the
most effective ways that purchasers and payers can accomplish
this goal is by arranging for a portion of a provider's
reimbursement to be tied to achieving high-quality outcomes.
This should be done through rewards for better performance,
rather than penalizing providers for not achieving certain
performance targets.
Purchasers, plans, providers and patients should reach
consensus on which outcomes are to be rewarded. Purchasers
and payers should link financial incentives to quality
improvement efforts that will affect a large number
of patients, have easily identifiable and measurable
performance measures, and are feasible for providers
to implement. The first wave of payment arrangements
featuring performance-based financial incentives will
yield lessons for the broader health care system.
|
