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Pay for quality: how much pay for how much quality?
The US healthcare system is evolving. Historically, providers earned compensation based upon the volume of services that they delivered. As pointed out in a recent Journal of Comparative Effectiveness Research article, ‘provider payment incentives have long been viewed as an important factor driving decisions about the types of care that patients receive’ [1] . In a fee-for-service environment, providers have incentives to deliver more services. However, that system is evolving, with a variety of models being used ranging from fixed fees for major surgical procedures like hip replacement (including prehospital and posthospital services) to Accountable Care Organizations financially responsible for large populations and longitudinal care. These alternative payment models shift volume-based reimbursement to payment for either a specified bundle of services, a clinically defined episode of care or an entire year of care. Accordingly, hospitals have economic responsibility for rehospitalizations that might occur within a defined time period, and physicians need to manage a population of patients within a budget. In this evolution, fee-for-service incentives that may lead to overuse shift to possibilities of underuse. Will patients with low back pain still undergo MRI scanning when necessary? Will patients with hard to control diabetes receive insulin pumps? And will patients with rheumatoid arthritis be prescribed biologic therapy when less expensive therapies fail to control the disease? In the Medicare Shared Savings Program, Accountable Care Organizations receive 50% of the difference between projected and actual costs [2] . In a fully capitated model, provider entities retain 100% of the savings. At the individual physician level, bonuses based
10.2217/CER.14.23 © 2014 Future Medicine Ltd
upon meeting utilization targets can also be substantial. In contrast to the managed care efforts of the 1990s that only focused upon financial responsibility, today’s performance-based systems incorporate measures of quality. By achieving quality benchmarks, providers receive add-on payments (or avoid penalties). Quality benchmarks and payment related to them have the potential to offset the incentives for underuse in these new ‘bundled’ payment approaches. In a companion Journal of Comparative Effectiveness Research article to the one cited above, Lake explored various ways payment systems might enhance evidencebased decision-making [3] . An unanswered question is: how much pay should there be for how much quality? Are today’s quality payments sufficiently high to offset the bundled payment incentives toward underuse? And, if not, what is the optimal balance? Many organizations invest substantial efforts into the development of quality measures. The National Quality Forum has over 600 approved ones [4] . The National Committee for Quality Assurance has 49 physician care assessments in its widely used Healthcare Effectiveness Data and Information Set [5] , and the Medicare Shared Savings Program program monitors 33 Accountable Care Organization quality measures [1] . In addition, the Centers for Medicare and Medicaid Services has a variety of physician quality components related to the use of electronic health records and electronic prescribing as well as overall quality assessment approaches (Physician Quality Reporting System, Valuebased payment modifier program). Although these programs address relevant quality domains, the physician payments associated
J. Comp. Eff. Res. (2014) 3(4), 329–330
Robert W Dubois National Pharmaceutical Council, 1717 Pennsylvania Avenue, NW Suite 800, Washington, DC 20006, USA Tel.: +1 202 827 2079 [email protected]
part of
ISSN 2042-6305
329
News & Views From Methods to Policy with them are modest ranging from 1 to 2% of revenue for either achieving the desired benchmark or a similar sized penalty for nonachievement [6] . In a more leveraged approach, the Medicare Shared Savings Program program has a quality benchmark ‘floor’, which if not exceeded nullifies the receipt of shared savings. What is the proper balance between the responsibility to use resources efficiently (up to 50–100% of achieved savings) and those related to quality (1–2% of revenue)? Unfortunately, relatively few rigorous studies have focused upon this question. A systematic review of 128 articles examined whether financial incentives improve quality of care. Only nine studies used a randomized design with the remaining using a variety of observational study approaches. The authors summarize their findings with caution and suggest modest but not consistent enhancement in quality [7] . This review did not include studies in a shared savings environment with its incentives toward underuse. Additional complexities include whether payments should reflect individual versus group performance and whether the desired quality benchmark has already been achieved (‘ceiling’ effect) [8] .
How much pay should there be for how much quality? Likely, quality bonuses/penalties below 5% will not be sufficient to balance the strong financial motivation to economize. Should the ratio of quality to economic incentives be 20:80, 50:50 or 80:20? Without rigorous and likely randomized assessments, the proper balance will remain unknown. As the US’ $2.8 trillion healthcare system [9] evolves from volume to value, finding this proper balance is crucial otherwise we will achieve the undesired triple aim of worse health, poor care and inefficient healthcare expenditures.
References
6
Medicare Initiatives and You: Bonuses and Penalties. www.aafp.org/dam/AAFP/documents/practice_ management/regulatory_compliance/MedicareBonusPenalty. pdf
7
Van Herck P, De Smedt D, Annemans L, Remmen R, Rosenthal MB, Sermeus W. Systematic review: effects, design choices, and context of pay-for-performance in health care. BMC Health Serv. Res. 10, 247–260 (2010).
8
Petersen LA, Simpson K, Pietz K et al. Effects of individual physician-level and practice-level financial incentives on hypertension care: a randomized trial. JAMA 310, 1042–1050 (2013).
9
National Health Expenditures 2012 Highlights. www.cms.gov/Research-Statistics-Data-and-Systems/ Statistics-Trends-and-Reports/NationalHealthExpendData/ downloads/highlights.pdf
1
330
Rich EC, Lake TK, Valenzano CS, Maxfield MM. Paying the doctor: evidence-based decisions at the point-of-care and the role of fee-for-service incentives. J. Comp. Eff. Res. 2(3), 235–247 (2013).
2
Centers for Medicare and Medicaid Services. Medicare Shared Savings Program Final Rule, CMS-1345-F. Fed. Regist. 76(212), 67802–67990 (2011).
3
Lake TK, Rich EC, Valenzano CS, Maxfield MM. Paying more wisely: effects of payment reforms on evidence-based clinical decision-making. J. Comp. Eff. Res. 2(3), 249–259 (2013).
4
National Quality Forum. www.qualityforum.org/Home.aspx
5
HEDIS 2014 Technical Specifications for Physician Measurement. www.ncqa.org/Portals/0/HEDISQM/HEDIS2013/ HEDIS%202014%20List%20of%20Physician%20 Measures.pdf
J. Comp. Eff. Res. (2014) 3(4)
Financial & competing interests disclosure RW Dubois is employed by the National Pharmaceutical Council, a policy research organization supported by the nation’s major research-based pharmaceutical companies. The author has no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed. No writing assistance was utilized in the production of this manuscript.
future science group
Pay for quality: how much pay for how much quality?
The US healthcare system is evolving. Historically, providers earned compensation based upon the volume of services that they delivered. As pointed out in a recent Journal of Comparative Effectiveness Research article, ‘provider payment incentives have long been viewed as an important factor driving decisions about the types of care that patients receive’ [1] . In a fee-for-service environment, providers have incentives to deliver more services. However, that system is evolving, with a variety of models being used ranging from fixed fees for major surgical procedures like hip replacement (including prehospital and posthospital services) to Accountable Care Organizations financially responsible for large populations and longitudinal care. These alternative payment models shift volume-based reimbursement to payment for either a specified bundle of services, a clinically defined episode of care or an entire year of care. Accordingly, hospitals have economic responsibility for rehospitalizations that might occur within a defined time period, and physicians need to manage a population of patients within a budget. In this evolution, fee-for-service incentives that may lead to overuse shift to possibilities of underuse. Will patients with low back pain still undergo MRI scanning when necessary? Will patients with hard to control diabetes receive insulin pumps? And will patients with rheumatoid arthritis be prescribed biologic therapy when less expensive therapies fail to control the disease? In the Medicare Shared Savings Program, Accountable Care Organizations receive 50% of the difference between projected and actual costs [2] . In a fully capitated model, provider entities retain 100% of the savings. At the individual physician level, bonuses based
10.2217/CER.14.23 © 2014 Future Medicine Ltd
upon meeting utilization targets can also be substantial. In contrast to the managed care efforts of the 1990s that only focused upon financial responsibility, today’s performance-based systems incorporate measures of quality. By achieving quality benchmarks, providers receive add-on payments (or avoid penalties). Quality benchmarks and payment related to them have the potential to offset the incentives for underuse in these new ‘bundled’ payment approaches. In a companion Journal of Comparative Effectiveness Research article to the one cited above, Lake explored various ways payment systems might enhance evidencebased decision-making [3] . An unanswered question is: how much pay should there be for how much quality? Are today’s quality payments sufficiently high to offset the bundled payment incentives toward underuse? And, if not, what is the optimal balance? Many organizations invest substantial efforts into the development of quality measures. The National Quality Forum has over 600 approved ones [4] . The National Committee for Quality Assurance has 49 physician care assessments in its widely used Healthcare Effectiveness Data and Information Set [5] , and the Medicare Shared Savings Program program monitors 33 Accountable Care Organization quality measures [1] . In addition, the Centers for Medicare and Medicaid Services has a variety of physician quality components related to the use of electronic health records and electronic prescribing as well as overall quality assessment approaches (Physician Quality Reporting System, Valuebased payment modifier program). Although these programs address relevant quality domains, the physician payments associated
J. Comp. Eff. Res. (2014) 3(4), 329–330
Robert W Dubois National Pharmaceutical Council, 1717 Pennsylvania Avenue, NW Suite 800, Washington, DC 20006, USA Tel.: +1 202 827 2079 [email protected]
part of
ISSN 2042-6305
329
News & Views From Methods to Policy with them are modest ranging from 1 to 2% of revenue for either achieving the desired benchmark or a similar sized penalty for nonachievement [6] . In a more leveraged approach, the Medicare Shared Savings Program program has a quality benchmark ‘floor’, which if not exceeded nullifies the receipt of shared savings. What is the proper balance between the responsibility to use resources efficiently (up to 50–100% of achieved savings) and those related to quality (1–2% of revenue)? Unfortunately, relatively few rigorous studies have focused upon this question. A systematic review of 128 articles examined whether financial incentives improve quality of care. Only nine studies used a randomized design with the remaining using a variety of observational study approaches. The authors summarize their findings with caution and suggest modest but not consistent enhancement in quality [7] . This review did not include studies in a shared savings environment with its incentives toward underuse. Additional complexities include whether payments should reflect individual versus group performance and whether the desired quality benchmark has already been achieved (‘ceiling’ effect) [8] .
How much pay should there be for how much quality? Likely, quality bonuses/penalties below 5% will not be sufficient to balance the strong financial motivation to economize. Should the ratio of quality to economic incentives be 20:80, 50:50 or 80:20? Without rigorous and likely randomized assessments, the proper balance will remain unknown. As the US’ $2.8 trillion healthcare system [9] evolves from volume to value, finding this proper balance is crucial otherwise we will achieve the undesired triple aim of worse health, poor care and inefficient healthcare expenditures.
References
6
Medicare Initiatives and You: Bonuses and Penalties. www.aafp.org/dam/AAFP/documents/practice_ management/regulatory_compliance/MedicareBonusPenalty. pdf
7
Van Herck P, De Smedt D, Annemans L, Remmen R, Rosenthal MB, Sermeus W. Systematic review: effects, design choices, and context of pay-for-performance in health care. BMC Health Serv. Res. 10, 247–260 (2010).
8
Petersen LA, Simpson K, Pietz K et al. Effects of individual physician-level and practice-level financial incentives on hypertension care: a randomized trial. JAMA 310, 1042–1050 (2013).
9
National Health Expenditures 2012 Highlights. www.cms.gov/Research-Statistics-Data-and-Systems/ Statistics-Trends-and-Reports/NationalHealthExpendData/ downloads/highlights.pdf
1
330
Rich EC, Lake TK, Valenzano CS, Maxfield MM. Paying the doctor: evidence-based decisions at the point-of-care and the role of fee-for-service incentives. J. Comp. Eff. Res. 2(3), 235–247 (2013).
2
Centers for Medicare and Medicaid Services. Medicare Shared Savings Program Final Rule, CMS-1345-F. Fed. Regist. 76(212), 67802–67990 (2011).
3
Lake TK, Rich EC, Valenzano CS, Maxfield MM. Paying more wisely: effects of payment reforms on evidence-based clinical decision-making. J. Comp. Eff. Res. 2(3), 249–259 (2013).
4
National Quality Forum. www.qualityforum.org/Home.aspx
5
HEDIS 2014 Technical Specifications for Physician Measurement. www.ncqa.org/Portals/0/HEDISQM/HEDIS2013/ HEDIS%202014%20List%20of%20Physician%20 Measures.pdf
J. Comp. Eff. Res. (2014) 3(4)
Financial & competing interests disclosure RW Dubois is employed by the National Pharmaceutical Council, a policy research organization supported by the nation’s major research-based pharmaceutical companies. The author has no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed. No writing assistance was utilized in the production of this manuscript.
future science group
