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“Paying for Performance”
Starting with MA
Gail R. Wilensky
Project HOPE
April 9, 2008
Pay for Performance
Remains Controversial
♦ Really Mean “Rewarding Excellence”
that is quality and efficiency
and
♦ “Encouraging Improvement”
Besides –getting what we pay for now
and don’t like it!
What’s the Problem?
♦ Spending growth rates are unsustainable
- 2.5% annual growth faster than the economy
(1960-2004)
♦ Lots of problems with patient safety
95,000 medical errors
♦ Lots of problems with quality
On average, about half of what’s appropriate
Different Types of Fiscal Pressure
For Medicare:
♦ Trust Fund
Insolvency projected in 2019
♦ General Revenue
Pressure on other gov’t spending
For rest of health care:
Pressure on wages
Less for non-health spending
Long Term Pressures are Huge!
If Medicare/Medicaid grow at GDP + 2.5%
By 2030: will account for 11.5% of GDP
(With Social Security: 17%)
If Medicare/Medicaid grow at GDP + 1%
By 2030: will account for 8.4% of GDP
(In 2005: 4.2%)
How Big A Problem?
Some historical facts --♦ Overall tax rate last 50 years: 18.5% of GDP
♦ Allowing tax cuts to expire adds (only) 2% to rev: 2030
♦ Previous in entitlements handled not by ing taxes
Major budgetary challenges ahead!
Incentives Are A Big Problem
Medicare -20+ years getting it exactly wrong!
Same reimbursement for best in class and worst in class
(DRGs, RBRVS, Home Care, Nursing Homes and MA)
Physician fee schedule is even worse
penalizes efficient docs
Private sector hasn’t been much better
“First Things First”…
Need a National Measurement System
♦ Coherent, goal oriented system to access/report
performance
♦ Need a National system to reach National goals
♦ Information must be transparent/available
♦ Begin with “starter set”/ then comprehensive
measures
2006 IOM Report on P4P
“Start now, go slow, active learning”
♦ Phased approach
♦ Start with “pay for reporting”
♦ Initial funding from existing funds – except docs
♦ Initially use provider-specific funds; move to
consolidated pool – “shared accountability”
Fortunately, MA Already Has
Reporting System
♦ HOS - Health Outcomes Survey
♦ HEDIS -- Healthcare Effectiveness Data and
Information Set
♦ CAHPS -- Consumer Assessment of Healthcare
Providers and Systems
Unfortunately, not all MA plans report;
MSA’s and PFFS exempted
How to Proceed?
Slowly -- in terms of $ at risk
Quickly -- in terms of start time
“Sooner rather than later” is best
Don’t need new legislation
(I think)
Budget Neutral Strategies can Vary
Use a portion of the MA premium that is above FFS
-- Pay out differentially if meet certain HEDIS levels
-- Pay out according to HOS or CAHPS measures
Continue public reporting as well as P4P
Going Forward
Need to bring in other MA Plans
Need to make quality information available for FFS in the
market area
Begin P4P in other areas of Medicare
Hospitals -- ready as well as MA
Physicians -- critical but harder
Many Areas Need Further Research
♦ Most of the focus has been on quality measures
need more effort on efficiency
♦ Assess impacts of weighting strategies
quality/efficiency; improvement/attainment
♦ How big an incentive to change physician behavior?
♦ How to adjust for “social” compliance differences
Biggest Worry…
“Unintended Consequences”
♦ Patient selection
♦ Widening performance gaps
♦ Increasing disparities
♦ “Teaching to the test”
Bottom Line: Going Forward
♦ Need to realign financial incentives
♦ Reward/plans/institutions/clinicians who provide high
quality/efficiently produced care
♦ Also need to involve consumers
“value-based” insurance;
reward healthy lifestyles
And better information on comparative effectiveness
would help!
Will These Changes “Bend the Curve”
♦ Don’t know how much difference better information and
better incentives will make
♦ “Easier” politically to imagine these changes
♦ Alternatives get “really ugly, really quickly”