Performance Contracting: Are you ready?

1. Performance Contracting: Are you ready? Jay Ford, Ph.D. Director of Research, NIATx June 2010 Reduce Waiting & No-Shows  Increase Admissions & Continuation

2. ONDCP • Performance Contracting for State Treatment Systems • Work at the state level to incentivize providers to get results • Pilot Project ($6 Million) • Enhance Drug Treatment Quality • Incentivize providers to achieve specific performance targets

3. Key Lessons Learned: Pay for Performance • Building the system • Pilot testing • Offering the right type of incentive • Overcoming potential obstacles • Implementing strategies for long-term success and sustainability

4. Building the system • Involve staff who can examine associated planning, financial, and legal issues. • Determine incentive types, develop targets, and provide feedback reports. • Will a contractual set-aside or grant funds pay for the incentives now and in the future? • How often are the rewards or penalties administered? • Who does monitoring and who informs providers of penalties?

5. Pilot Testing • Pilot test the system before statewide rollout: • Involve only a core set of providers. • Allow providers to review contract changes. • Eliminate accountability for improvement changes (good or bad) for the first six months.

6. Incentives • When deciding how to pay for the incentives, you need to consider: • Will you pay for the incentives with a contractual set-aside? • Will you pay for the incentives through existing grant funding? • What is your plan for ongoing financial set-asides to pay for the incentives?

7. Incentives • Offering the right type of incentive: • Treatment Provider Incentives • Data collection incentives • Spreading process improvement

8. Incentives • The incentive and reward structure is based on the measure • Regardless of the type of provider incentive, it must • be meaningful, • achievable, and • minimize provider data collection burdens.

9. Potential Obstacles • Lack of valid and practical quality measures • Linking incentives to specific outcomes • Unwillingness or inability of providers to collect data • Validity of the data used to calculate the incentive measures

10. Implementation Strategies • Develop valid and practical measures. • Offer incentives meaningful to providers. • Ensure the data is easily obtainable and minimize reporting burden. • Customize the system to the way providers do business. • Provide training on how to use data effectively.

11. Contracting • When making legal and binding changes to contracts, you need to consider: • How do they get settled? • How often are the rewards or penalties administered? • Who does monitoring and who informs providers of penalties? • Did you seek approval of the contract changes through legal?

12. References • Bremer, R.W., Scholle, S.H., Keyser, D., Houtsinger, J.V.K. & Pincus, H.A. (2008). Pay for Performance in Behavioral Health. Psychiatric Services 59(12):1419-1429. • McClellan, A.T., Kemp, J., Brooks, A., Carise, D. (2008). Improving public addiction treatment through contracting: The Delaware Experiment. Health Policy 87: 296-308. • Pelonero, A.L. & Johnson, R.L. (2007). A Pay-for-Performance Program for Behavioral Health Care Providers. Psychiatric Services 58(4):442-444. • Shen, Y. (2003). Selection Incentives in Performance-Based Contracting System. Health Services Research 38(2):535-552. • Shephard, D.S., Calabro, J.A.B., Love, C.T., McKay, J.R. et al. (2006). Counselor Incentives to Improve Client Retention in an Outpatient Substance Abuse Aftercare Program. Administration and Policy in Mental Health and Mental Health Services Research 33(6):629-635.

13. For further information, please visit www.niatx.net www.odmhsas.org/data Contact Information Jay Ford, PhD Jay.ford@chess.wisc.edu 608-262-4748