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

1. 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

2. 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

3. 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)

4. Physicians Consortium for Performance Improvement • 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

5. Performance Measures – Expected 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 improvepatient care

6. What (or Who) is Driving Pay for Performance? The Members of Congress I have talked to almost uniformly believe that – P 4 P = Cost Control

7. 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

8. 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.

9. 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!

10. Pay for Performance – Reality Check • 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. Electronic Health Record – Disappointing Reality Check * • 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

18. 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

19. 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

20. 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

21. Measuring “Efficiency”Using Grouper Methodology • 3 Grouper Methodologies • All use episodes of care

22. 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)

23. Efficiency Measurement: How Is It Done? • 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.

24. Efficiency Measurement: How Is It Done? • Attribution is given to physician/provider. • 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.

25. Efficiency Measure Attributable to a Physician Ratio: Actual Costs Expected Costs Desired Score: Less than 1 1 = Average

26. 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

27. Intent May Not Be Clear • 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

28. Tiered or Narrow Networks • Alternative to Pay for Performance • Focused on Healthcare Costs • Seek least expensive providers • Use differential payments to ‘steer’ patients

29. Tiered Networks Low Cost Network In-Network Physicians Efficiency Measures Average Cost Network High Cost Network

30. 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

31. “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

32. The Rising Cost of TechnologyorThe Case of the Aching Back

33. 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

34. 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

35. PLIF Evolution - 1994 22630 PLIF $1484 20938 Structural Bone autograft 198 $1682 CPT OperationMedicare * Courtesy of John A Wilson, MD, FACS

36. PLIF – Posterior Lumbar Interbody Fusion * • Dramatic increase in utilization – from mid-90s • Neurosurgery most common provider • Significant technological advancements • Expensive technology * Courtesy of John A Wilson, MD, FACS

37. PLIF Evolution - 2007 • 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 * Courtesy of John A Wilson, MD, FACS

38. 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

39. Have the results improved ? Have the results improved by a factor of 10 ? Have we improved the value of our surgery ?

40. Principles to Guide Change in Healthcare * Value = Improved Health Outcomes Costs * Porter & Teisberg JAMA 297: 2007

41. Principles to Guide Change in Healthcare * • The goal is value for patients – for ethical reasons • Care should be organized around medical conditions and care cycles • Results (outcomes) must be measured 4) Results reported as risk-adjusted outcomes and costs – * Porter & Teisberg JAMA 297: 2007

42. 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

43. 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

44. The Virginia Mason HealthSystem/Aetna Experience* *Case Study: HBS – Bohmer, R & Ferlins, E - Sept , 2005

45. v Courtesy: Gary Kaplan, MD , CEO Virginia Mason Healthcare System

46. 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

47. HealthcareAttitudes Old New Courtesy: Gary Kaplan, MD , CEO Virginia Mason Healthcare System

48. 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

49. 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

50. 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