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Medicare Spending per Beneficiary

April 30, 2012 in Hospitals, Medicaid/Medicare, Medicare, My Papers, P4P, Quality | 1 comment

Medicare’s Hospital Compare website evaluates hospital quality.  One of the most recent measures to be added to Hospital Compare is a measure of efficiency.  The measure calculates a price-standardized, case-mix adjusted measure of spending during period before, during and after a hospital admission. The Healthcare Economist (Jason Shafrin) and a team at Acumen (including Tom MaCurdy, Sajid Zaidi, Elen Shrestha, and David Pham) worked closely with CMS to develop this measure.  Additional information on this measure is available here or see the results for San Francisco General Hospital here.

“The Spending per Hospital Patient with Medicare measure shows whether Medicare spends more, less, or about the same per Medicare patient treated in a specific hospital, compared to how much Medicare spends per patient nationally. This measure includes any Medicare Part A and Part B payments made for services provided to a patient during the 3 days prior to the hospital stay, during the stay, and during the 30 days after discharge from the hospital.

This result is a ratio calculated by dividing the amount Medicare spends per patient for an episode of care initiated at this hospital by the median (or middle) amount Medicare spent per patient nationally.

A result of 1 means that Medicare spends ABOUT THE SAME amount per patient for an episode of care initiated at this hospital as it does per hospital patient nationally.

A result that is more than 1 means that Medicare spends MORE per patient for an episode of care initiated at this hospital than it does per hospital patient nationally.

A result that is less than 1 means that Medicare spends LESS per patient for an episode of care initiated at this hospital than it does per hospital patient nationally.

Lower numbers are better.“

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All-or-Nothing P4P

April 4, 2012 in P4P, Pharmaceuticals, Quality | No comments

Many of Medicare’s value-based purchasing (VBP) initiatives offer a continuum of rewards based on provider performance.  Whereas all-or-nothing VBP initiatives only grant bonuses to providers who exceed a single threshold, the Medicare VBP programs–such as its hospital VBP program–reward hospitals based a value-based modifier that is proportional to its quality score.

One of the reasons to avoid the ‘all-or-nothing’ framework is that providers who are far from the threshold may give up; they may not invest significant efforts to improve quality since the change of reaching the threshold may be small.

A paper by Dowd, Feldmand and Nersesian (2012) finds that providers do in fact ‘give up’ in practice if the threshold is set too high.  The paper examines a physician network’s efforts to improve their generic prescription rate (GPR).  The authors find that:

“The GPR-maximizing target would induce an improvement in average GPR from 58.3% to 65.8% or 7.5 percentage points.  When the target is set above 80%, practices with equilibrium GPR below 58.3% will ‘give up’ in the sense that they will not improve relative to their equilibrium value.”

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Where is the Quality Incentive Program for End-Stage Renal Disease Facilities heading in 2013 and 2014?

March 14, 2012 in Medicare, P4P | No comments

Medicare payments for End Stage Renal Disease rely on a value-based purchasing (VBP) system known as the Quality Incentive Program (QIP). Today I review proposed changes to the QIP that will effect the payments for dialysis centers in 2013 and 2014.

Payment Year 2013

Two measures have been adopted for the payment year (PY) 2013 ESRD QIP

  • Percentage of patients with hemoglobin levels greater than 12 g/dL (Hemoglobin Greater Than 12 g/dL) Lower percentage indicates better care
  • Percentage of patients with a Urea Reduction Ratio (URR) of 65% or greater (Hemodialysis Adequacy) Higher percentage indicates better care

To qualify for a score, facilities must have at least 11 patients eligible for each measure.

Each facility that meets or exceeds performance standard for a measure receives 10 points (for each measure).  For other facilities, the scoring is more complex.

  • Facility does not meet the performance standard for a measure: 2 points subtracted from 10 points for every 1% below the performance standard
  • Total Performance Score = Sum of the Two Measure Scores x 1.5

The payment reduction for payment year 2013 depend on the total performance score (TPS) as follows:

  • 30 points: 0%
  • 26-29 points: 1.0%
  • 21-25 points: 1.5%
  • <21 points: 2.0%

 

Payment Year 2014

In PY 2014, the ESRD QIP will add one clinical measure (vascular access type (VAT)) and three reporting measures.  The reporting measures include:

  • Dialysis event data submission to the Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) system
  • Patient Satisfaction (measured by In-center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) survey)
  • Monthly mineral metabolism monitoring (serum calcium and serum phosphorus)

For PY 2014, there is a significant lag between when the data are collected and when payments are adjusted.  PY 2014 is based off a performance period of CY2012 and a baseline period of July 1, 2010 to June 30, 2011.  The baseline data is used to measure an improvement score.

 

The payment reduction for payment year 2014 depend on the total performance score (TPS) as follows:

  • 53-100 points: 0%
  • 43-52 points: 0.5%
  • 33-42 points: 1.0%
  • 23-32 points: 1.5%
  • <23 points: 2.0%

The scoring system and performance standards are outlined in more detail here.

 

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Do Disease Management and Value-Based Purchasing Programs Work?

February 15, 2012 in Medicare, P4P | 2 comments

In short, the answer is no. The CBO released an issue brief examining two types of demonstrations.

  • Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.
  • Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.

“The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees.”

Today, the healthcare economist looks at these programs in more detail.

Disease Management Demonstrations

These demonstrations were made up of 34 programs operated by disease management companies. “The programs used nurses as care managers to educate patients about their chronic illnesses, encourage them to follow self-care regimens, monitor their health, and track whether they received recommended tests and treatments. In most programs, the care managers were not integrated into physicians’ practices, and their contact with patients was primarily by telephone.”

These programs targeted Medicare beneficiaries with specific chronic diseases. Most programs were not tailored to focus on chronically ill beneficiaries who were expected to have the highest cost of care. The results are displayed in the chart:

test

CBO found that the lack of integration into the physician practice and the lack of physical presence made most of these disease management programs not useful.

Value-Based Purchasing Demonstrations

The list below describes the four major VBP demonstration programs and their findings.

  • Physician Group Practice (PGP) Demonstration. 10 large practices were permitted to keep some of the estimated savings if they reduced total Medicare spending for their patients. In the second year of the demonstration, average Medicare spending excluding the bonuses paid to physician groups was about 1 percent below projections; with bonuses included, average
    Medicare spending was just 0.1 percent below projections—about $7 per beneficiary. Results for years 3 and 4 of the PGP demonstration are currently being analyzed.
  • Premier Hospital Quality Incentive Demonstration. 278 hospitals were offered bonuses if their scores on quality-of-care measures were in the top tier of participating hospitals.  This demonstration had no net effect on Medicare spending.
  • Home Health Pay-for-Performance Demonstration. This demonstration allowed 273 home health agencies to keep some of the estimated savings if they reduced total Medicare spending for their patients and met certain criteria regarding quality of care.  Initial results indicate that this demonstration had no net effect on Medicare spending.
  • Medicare Participating Heart Bypass Center Demonstration. Medicare made bundled payments to cover all inpatient hospital and physicians’ services for coronary artery bypass graft surgeries conducted at seven participating hospitals. Bundled payments reduced Medicare’s expenditures for heart bypass surgeries by about 10 percent, and there were no apparent
    adverse effects on patients’ outcomes.

Whereas the first three VBP programs aimed to give providers bonuses for reducing cost and increasing quality, the Heart Bypass Center demonstration relied on bundled payments to align the financial incentives offered to hospitals and physicians. The bundled payments reduced cost without decreasing quality. Of course, measuring quality is difficult and it is possible that the Bypass demonstration did not fully capture all important aspects of quality. Nevertheless, these initial results indicate that bundling may be a more promising cost-saving mechanism than provider bonuses.

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Medicare Physician Payment Adjustments

November 21, 2011 in Healthcare IT, Medicare, P4P, Physician Compensation, Quality | No comments

The Medicare billing system is complex.  There an alphabet soup of acronyms, (e.g., RVUs, CPT, HCPCS, GPCI) and each of these affects payments in different ways.  In addition to the standard payment terms, Medicare is also creating additional payment incentives.  These payment incentives fall into three broad categories:

  • Quality reporting
  • e-Prescribing (eRx)
  • Electronic Health Records (EHR)

CMS’s Physician Quality Reporting System (PQRS) allows physicians to report the quality of care their patients receive. Physicians can report PQRS measures through claims, registries, or EHR systems.  To incentivize physician participation in the PQRS, CMS has adopted incentive payments.  In 2012-2014, Physicians who meet the PQRS participation requirements will receive a 0.5 percent payment bonus.  In 2015 through 2017, however, who do not submit a sufficient number of PQRS measures actually will receive a payment reduction.

In addition to the PQRS incentive, beginning 2012, Medicare eligible professionals who are not successful electronic prescribers under the eRx Incentive Program to a payment adjustment. This payment adjustment applies to all of the eligible professional’s Part B-covered professional services under the Medicare Physician Fee Schedule (MPFS). From 2012 through 2014, the payment adjustment will increase with each new reporting period. Accordingly, for 2012, eligible professionals receiving a payment adjustment will be paid 1.0% less than the Medicare Physician Fee Schedule (MPFS) amount for that service. In 2013 and 2014, the payment adjustment increases to 1.5% and 2.0% respectively.

A table summarizing these incentive payments is below.

Year PQRS eRx
Incentive Payment MOC Incentive Sucessful
2011 1.0% 0.5% 1% N/A
2012 0.5% 0.5% 1% -1%
2013 0.5% 0.5% 0.5% -0.5%
2014 0.5% 0.5% N/A -2%
2015 -1.5% N/A N/A N/A
2016 -2.0% N/A N/A N/A
2017 -2.0% N/A N/A N/A

CMS also offers physicians incentive payments to adopt EHR.  Incentive payments can be as high as $18,000 per year or $44,000 over a five year period.

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MassHealth P4P: Did it work?

August 2, 2011 in Hospitals, Medicaid, P4P, Quality | 1 comment

Massachusetts’ Medicaid program instituted a pay-for-performance program in 2008.  Did it work?  According to this paper, the answer is no.

MassHealth P4P Background

The MassHealth pay-for-perfrmance P4P program was implemented in 2008.  At first the program was implmented using a P4P structure for pneumonia and pay-for-reporting for surgical infection prevention (SIP) and transitioning to P4P for both conditions in 2009. The program measures and incentivizes hospital quality for a subset of MassHealth [Massachusetts Medicaid program] patients who are enrolled in plans that directly bill MassHealth.

The Measures

For pneumonia:

  • oxygenation assessment,
  • blood culture performed in emergency department before first antibiotic received in hospital,
  • adult smoking cessation advice and counseling, initial antibiotic received within 6 hours of arrival, and
  • appropriate antibiotic selection in immunocompetent patients.

For Surgical Infection Prevention (SIP):

  • prophylactic antibiotic within 1 hour of surgical incision,
  • appropriate antibioticselection for surgical prophylaxis, and
  • prophylactic antibiotic discontinuedwithin 24 hours after surgery end time.

Evaluating Hospital Performance

The MassHealth P4P followed the Hospital VBP Report to Congress. Hospital performance on individual measures is aggregated to create a composite score; this composite score then is used to indicate the share of the bonus paymen that each hospital receives. More information on the Hospital VBP Report to Congress can be found here.

Identification Strategy

“We do not observe the quality of care provided to Medicaid patients in Massachusetts and other states, and instead we observe the quality provided to patients from all payers. Our identification strategy assumes that the financial incentives of the MassHealth program, which are based on quality performance
for only a subset of MassHealth patients, are reflected in the quality of care received by all patients.”

The authors control for:

  • Observed and unobserved hospital characteristics which remain fixed over time (i.e., fixed effects)
  • A secular trend in quality for each hospital (i.e., using a hospital-specific time trend)
  • Hospital case mix measured by a “difficulty index” to identify cases where hospitals choose patients selectively after P4P was implemented
  • In one sensitivity analysis, the authors use propensity scoring, nearest neighbor, one-to-one matching without replacement to create a sample of non-Massachusetts hospitals similar to those in Massachusetts. Hospitals were matched based on ownership, nuber of beds, urban/rural status, share of Medicare patients, and share of Medicaid patients.
  • The authors also test if hospitals with more Medicaid patients are more likely to have a larger increase in quality.

Evaluating Hospital Performance

The authors find that the MassHealth P4P has little effect on quality. “Estimates from our preferred specification, including hospital fixed effects, trends, and the control for measure completeness, indicate small and nonsignificant program effects for pneumonia (−0.67 percentage points, p>.10) and SIP (−0.12 percentage points, p>.10). ” The result could be due to the fact that P4P has, in actuality, no effect on quality. On the other hand, by using hospital-specific time trends, there may be little variation in quality over time to capture quality improvements after the P4P implementation.

Source

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Risk Scores and provider size

June 16, 2011 in P4P | 1 comment

At a recent AcademyHealth presentation, Cheryl Damberg discussed her research to design a P4P program for implementation for Integrated Healthcare Association (IHA).  One thing I noticed about the presentation was that smaller provider groups had patients with lower risk scores (i.e., healthier patients).  Is it really the case that small providers treat much healthier patients?

My guess is the answer is not.  An alternative explanation would be that small providers do not have as much time or administrative staff to help them code the patient’s comorbidities in their claims (or even EMR).  If this is the case, it would make it appear that small provider’s patients are healthier when in fact the true differences may be due to differences in the quality of the data the providers report.

Any VBP system would need to take into account these differences when evaluating providers.  Setting a lower standard for small providers, however, would provide a disincentive for small providers to expand into the large provider category, even if this expansion could (potentially) create economies of scale and improve patient care.

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Alternative Quality Contract

March 14, 2011 in P4P, Physician Compensation, Supply of Medical Services | No comments

“In January 2009 Blue Cross Blue Shield of Massachusetts launched a new provider payment system called the Alternative Quality Contract that exemplifies the type of experimentation with novel payment models that the Affordable Care Act encourages. The Alternative Quality Contract is a modified global payment model in which annual payments to medical groups are linked to a per member per month budget.”

Today I will review a paper by Chernew et al. (2011) describing BCBS’s Massachusetts initiative.
Read the rest of this entry »

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Medicaid P4P

March 7, 2011 in Medicaid, P4P | 1 comment

As part of health reform, Medicare is looking to institute value-based purchasing or pay-for-performance programs in a number of settings.   In fact, in my work for Acumen, I have worked on a number of these initiatives (e.g., P4P for physician efficiency profiling, implementing a VBP system in home health).  Medicare, however, isn’t the only public insurance program to implement P4P.  Today, I provide an overview of State Medicaid P4P programs.  Here are some highlights from a report by Kuhmerker and Hartmann (2007).

  • As of July 1, 2006, more than half of all state Medicaid programs were operating one or more pay-for-performance programs. Within the next five years, if all current plans to start new programs are realized, nearly 85 percent of states will be operating Medicaid pay-for-performance programs.
  • Medicaid is not a new entrant to the field of pay-for-performance: almost half of all existing programs are more than five years old. A similar percentage of programs began operations within the past two years. More than 70 percent of planned new programs are expected to start within the next two years.
  • Seventy percent of existing Medicaid pay-for-performance programs operate in managed care or primary care case management (PCCM) environments, focusing on health care for children, adolescents, and women. While planned programs are still focused on managed care and PCCM providers, they appear to be shifting their emphasis to environments in which quality and cost issues related to chronic disease management can be better targeted. Rewarding the provision of primary care continues to be a component in the vast majority of Medicaid pay-for performance programs.
  • Nine Medicaid programs are joining with other payers, employers, consumers, and providers in statewide and regional pay-for-performance and quality improvement efforts.
  • Health information technology (HIT) is a focus of numerous Medicaid pay-for-performance programs. Several Medicaid programs are “paying for participation,” rather than “performance,” in an effort to encourage providers to adopt electronic health records, electronic prescribing, and other technologies.
  • The vast majority of Medicaid directors reported that their priority in operating pay-for-performance programs is to improve quality of care rather than reduce costs.
  • HEDIS and HEDIS-like measures are most popular in Medicaid P4P.
  • In 2000, 55.8 percent of all Medicaid beneficiaries were enrolled in managed care; by December, 2004, this percentage had increased to 61.3 percent. Managed care is the primary P4P setting for Medicaid. Primary care case management (PCCM) is the second most prevalent provider type included in P4P programs.
  • Almost all states use attainment or attainment and improvement scores to assess provider performance.

Of particular interest to an economist, P4P bonus payments are paid through a variety of different mechanisms. Examples include:

  • a maximum pool is established. If the provider performance payments would result in bonuses greater than that amount, the bonuses are prorated. If provider
    performance payments would not use the complete pool, only the amount calculated is distributed;
  • a pool is established and all providers meeting the necessary standard receive a proportional share based on their relative performance. The entire pool is distributed;
  • a bonus amount is established per occurrence. Bonuses are paid out based on the number of occurrences and the dollar amount per occurrence;
  • a bonus equal to a specific percentage of a reimbursement rate is paid when a standard is met;
  • the bonus is an established share of a calculated amount saved as a result of the P4P program (for example, in shared savings situations). The share is usually included in a contract between the state and the provider or vendor;
  • a bonus is calculated, but can only be used to offset any penalties; and
  • in recognition of CMS guidelines in this area, states often include provisions that ensure that no plan can receive more than 105 percent of their capitation rate as a result of any redistribution of, or increase in, funds.

Other incentive schemes include penalties, differential reimbursement rates based on past performance levels, increased probability of receiving an auto-assigned Medicaid beneficiary for good performers, withholds, and grants.  These payments are most frequently made in six-month or three-month intervals. To accommodate billing lags, validation activities, and other calculation-related processes, the time period between the conclusion of the measurement interval and when the incentive is actually received ranges from one quarter to one year. Non-financial incentives include tools, initial bid ranking, and public recognition.

To implement the P4P program, 90% of programs rely on information from providers.  In some states, programs contract with vendors to collect data additional data.  Fifty percent of state Medicaid directors reported that internal Medicaid staff conduct validation of program-related information themselves by sampling the data.  Thirty percent of respondents said that their state hires consultants specifically for data validation purposes.

Does Medicaid P4P work? Most State Medicaid Directors don’t know. Fifty five percent have not conducted formal, either because the P4P program was new or due to limited financial resources.

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State Adoption of Nursing Home Pay-for-Performance

January 31, 2011 in Nursing Homes, P4P | No comments

On the importance of Nursing homes:

“More than 1.5 million people reside in U.S. nursing homes at a cost of more than $120 billion per year (Kaiser Family Foundation, 2007). Medicaid is the majority payer of nursing home services, giving indigent people access to nursing home care by directly reimbursing facilities for the care of Medicaid-eligible residents…State Medicaid programs are responsible for approximately half of all nursing home spending, and Medicaid residents constitute 65% of all bed-days.”

As nursing home expenditures have taken up a larger and larger share of expenditures, a number of State Medicaid Agencies have instituted pay-for-performance requirements (P4P).  A paper by Werner, Konetzka and Liang (2007) evaluate some of these P4P efforts.  A total of 15 states had planned or existing nursing home P4P programs when this article was published.

Here is a map of all the states who have initiated P4P programs for Nursing Homes.

“Financial rewards in nursing home P4P are based on a variety of different quality measures , including traditional measures such as staffing, regulatory deficiencies, resident satisfaction, and clinical quality and less traditional measures such as occupancy, efficiency, Medicaid use, and culture change. Most use at least 4 different categories of measures, and none uses less than 3.”

The following table summarizes the types of quality measures used in state nursing home P4P programs.  This table lists specific clinical measures used for P4P.

High performing nursing homes generally receive a financial reward for their status.  Most states use a per-diem add on as a reward for high performance.  One state, Vermont, gave flat-rate bonuses to up to 5 facilities that met predetermined quality thresholds.  This table summarizes the level of payment in selected state nursing home P4P programs.

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