Pay-for-performance programs are intended to improve population health and the patient experience, while reducing cost
Supplier success in a post‐reform healthcare market depends on many factors, including a fundamental and thorough understanding of the foundation of healthcare reform. This is part of an ongoing series designed to help readers understand the implications of reform.
As healthcare continues to move away from fee-for-service medicine in favor of outcomes-based medicine, providers will shift their goals to align with a new initiative – the Triple Aim of Healthcare.
The Triple Aim was introduced in 2007 by the Institute for Healthcare Improvement. Founded in 1980, the IHI initially focused on healthcare best practices and reducing defects and errors in specific areas, such as the emergency department or ICU. Today, the organization remains committed to improving healthcare.
The Triple Aim is a framework for optimizing health system performance by focusing on 1) the health of a population, 2) the experience of care for individuals within that population, and 3) the per capita cost of providing that care.
The three goals
Population health management calls for providers to keep a patient population as healthy as possible, minimizing the need for expensive emergency department visits, hospitalizations, tests, and procedures. They can do so by supplying preventive and chronic care to all their patients, and educating their population on how to support and manage their own healthcare needs during and between visits to their facility. Population health management tends to focus on high-risk patients, because they generate the majority of health costs.
The second element of the Triple Aim is an improved experience of care on the patient’s part. Providers look at six measurements: Was care safe, effective, timely, patient-centered, equitable or fair, and efficient?
The final goal of the Triple Aim is lowering per capita healthcare costs, measured as a total cost per member (or citizen) per month. To meet this goal, physicians need more efficient and cost-effective ways to care for their patients, avoiding unnecessary tests or procedures. Providers will be incentivized for engaging in their patients’ care, keeping them healthy, and reducing the utilization of hospitals and emergency departments.
Pay for performance
Many believe “pay-for-performance” initiatives will help providers attain the Triple Aim. These programs reward hospitals, physician practices and other providers based on their performance and reporting of select measures. Two of the main sponsors of P4P programs are government agencies and health insurance plans. Currently, 180 different P4P programs exist worldwide, with physician-focused programs outnumbering hospital programs four to one.
P4P programs measure clinical quality and safety, efficiency, patient experience and health information technology adoption. Successful programs send actionable and timely patient follow-up results to providers, offer incentives for providers to adopt health information technology, and encourage providers to participate in continuous quality improvement practices. Early feedback shows that such programs can help change behaviors.
Physician Quality Reporting System
One of the P4P programs to come out of the Affordable Care Act is the Physician Quality Reporting System, which rewards healthcare professionals for voluntarily reporting on quality care measures. The program is intended to reward eligible professionals for improving patient care through evidence-based measures, while preparing them for future reporting-based pay-for-performance programs. As of 2013, 139 quality measures and 22 measure groups were reportable to CMS by physicians and other caregivers in hospitals or physician practices.
Originally called the Physician Quality Reporting Initiative, or PQRI, the Physician Quality Reporting System started in 2007, and offered financial incentives for early adopters to participate. With the Affordable Care Act, these incentives continue for physicians who report during 2012, 2013 and 2014. Participating physicians will earn 0.5 percent each year for their Medicare billings and avoid a negative 1.5 percent payment adjustment or penalty for failing to report during this time, which will be applied in 2015. It’s the carrot-and-the-stick approach.
Bundled payments
Another P4P program – the Bundled Payment for Care Improvement Initiative – incentivizes groups of providers to coordinate care, by reimbursing them on the basis of expected costs for clinically defined episodes of care.
In the past, Medicare made separate payments to individual providers – such as the family practitioner, cardiologist, radiologist, surgeon, anesthesiologist, etc. – for the services furnished to beneficiaries during the course of treatment. As a result, each provider focused only on its portion of the patient’s care, creating fragmented care with minimal coordination. What’s more, the system rewarded the quantity of services offered by providers rather than their quality.
Bundled payments, on the other hand, bring into alignment multiple providers, including hospitals, post-acute care providers, physicians, and other practitioners. Introduced in January 2013, the initiative looks at 48 different patient episodes and offers four patient-centered models of care to choose from, allowing providers the flexibility to choose how to work together. Once a patient’s care is complete, participating providers receive one lump payment, which is shared among them. It is hoped that the result will be higher quality, more coordinated care, at a lower overall cost to Medicare.
Note: Watch future installments for information on three more common pay-for-performance programs: accountable care organizations, patient-centered medical homes, and value-based purchasing.
MDSI – the parent company of JHC – has developed the Healthcare Reform Navigation Series, an online program designed to make the task of preparing your organization for 2014 and beyond easier. This series will help you and your team with online courses that explain many of the key elements integral to understanding reform and the transformation from fee‐for‐service to fee‐for‐value. The program includes a 12-month schedule of topics and live sessions with industry experts.
To learn more about the Healthcare Reform Navigation Series, contact Tim Brack, director of training, education and meetings, at 770.263.5270 or tbrack@mdsi.org.
Sidebar: PQRS measure groups
Providers participating in the Physician Quality Reporting System must register and report on these 22 measures:
- Diabetes mellitus.
- Chronic kidney disease.
- Preventive care.
- Coronary artery bypass graft.
- Rheumatoid arthritis.
- Perioperative care.
- Back pain.
- Hepatitis C.
- Heart failure.
- Coronary artery disease.
- Ischemic vascular disease.
- HIV/AIDS.
- Asthma.
- Chronic obstructive pulmonary disease.
- Inflammatory bowel disease.
- Sleep apnea
- Dementia.
- Parkinson’s.
- Hypertension.
- Cardiovascular disease.
- Cataracts.
- Oncology.