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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.
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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.

Source:

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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.

Source:


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Physician Perspectives on Pay-for-Performance

January 26, 2011 in P4P, Quality | No comments

Survey Results

A 2004 poll of a sample of 400 randomly selected physicians found the following:

  • 71% of physicians supported payments based on the quality of care they provide,
  • over 60% of physicians thought that hospitals should also be paid based on the quality of care they provide,
  • Almost 90% of physicians thought that the current reimbursement system did not reward them for providing high-quality care, and
  • 62% supported public access to information about the quality of care they provide.

Quotation #1: Changing Perspective on P4P

“When I started my career in the late 1970s as an academic internist and geriatrician, I was skeptical of pay-for-performance, feeling that standards of care could not accurately assess the real benefits of my care of my frail elderly patients with multiple impairments. I still feel that way today because despite the rapid growth of the evidence base, we continue to measure relatively simple aspects of the process of care rather than measuring outcomes. I also felt then that pay-for-performance was a thinly veiled effort to increase efficiency rather than quality. Subsequent experience as the leader of a large academic health science center and as chief executive officer of a major health insurer has led me to believe that pay-for-performance holds substantial potential for enhancing quality of care.”

  • John W. Rowe, MD

    Quotation #2: The Problem of Complex Patients

    “Should metrics be simple or complex? Most current standards are simple. They state a basic clinical service that all patients with a certain condition should receive, such as prescription of β-blockers after myocardial infarction. Approximately 5% of patients are responsible for 50% of health care costs. They are typically complex. Therefore, we need standards to evaluate management of patients with chronic disease and multiple comorbid conditions. To achieve this goal, we will need a much richer evidence base than is currently available.”

    • John W. Rowe, MD

    Source: John W. Rowe, MD. Pay-for-Performance and Accountability: Related Themes in Improving Health Care. Ann Intern Med. 2006;145:695-699.

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    Value-Based Purchasing in Nursing Homes

    December 13, 2010 in Medicaid, Medicare, Nursing Homes, P4P | 1 comment

    More than 3 million frail and disabled individuals rely on nursing home services in any given year.  About half of these individuals consider the nursing home to be their primary place of residence.  Nursing home quality, however, has often been called into question.

    Some experts believe pay-for-performance schemes will improve nursing home quality.  Today, I will review previous efforts to improve nursing home quality though P4P.

    Briesacher et al. (2009)

    A paper by Briesacher, Field, Baril and Gurwitz review P4P in nursing homes in a variety of states.   The authors note that “Approximately one-half of all Medicaid Programs currently operate some type of pay-for-performance program, and 85 percent have plans to do so within 5 years.”  This report consider nursing home P4P programs in: California, Colorado, Florida, Georgia, Illinois, Iowa, Kansas, Massachusetts, Minnesota, Ohio, Oklahoma, Texas and Utah.

    Measures considered include:

    • Clinical Measures (e.g., pressure sores, use of physical restraints, pain management, quality of life, MDS indicators, state-developed CAHPS measures, care plans)
    • Satisfaction Levels (e.g., patient, family, employees)
    • Structural Measures (e.g., nursing retention, staff turnover, occupancy rates, special licensure, state survey compliance, staffing hours/ratios)
    • Cost (e.g., Medicaid utilization, administrative costs, efficiency)
    • Pressure sores,
    • Use of physical restraints,
    • Pain

    Bonuses were paid depending on whether the nursing homes surpassed some threshold of these quality measures.  Some of the bonuses were paid as a flat rate ($3/day in Ohio and $0.50-$0.0 in Utah) and other used a percentage increase (up to 2.4% in Minnesota, 1%-3% increase in Iowa).  The highest bonus paid was 5% of per diem reimbursement where the lowest bonuses were $0.25.

    “We found little empirical evidence that pay-for-performance programs increase the quality of care of residents or the efficiency of that care in nursing homes. However, the program set in San Diego did find benefits, and it used the strongest of all evaluation designs, a randomized control design.” The San Diego RCT randomized nursing homes into treatment and control groups and gave the treatment groups incentive payments for: (i) accepting patients needing the most functional assistance, (ii) improving patient functional status, and (iii) prompt discharges of patients who remained out of the facility for at least 90 days.

    Read the rest of this entry »

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    Evaluating VBP Programs

    December 8, 2010 in P4P | 2 comments

    The call for the adoption of value based purchasing programs has gained in popularity in recent years.  These programs give physicians, hospitals, or other providers bonuses (or penalties) depending on the quality of care their patients receive. The Affordable Care Act (ACA a.k.a Health Reform) includes provisions to establish a VBP program for hospital payments based on hospital quality reporting; a national, voluntary, 5-year bundled payment pilot program; and a new payment structure for providers organized as accountable care organizations.

    Despite their popularity, evaluating the health outcomes or even documenting the processes required to produce positive health outcomes is difficult.  As these new VBP programs come online, it will be increasingly important to evaluate these demonstrations and identify best practices.  A paper by McHugh and Joshi (2010) makes some recommendation on how to improve evaluations of value-based purchasing programs.  A summary of their recommendations are below.

    Problem Recommendation Focus Target Audience
    Limited information on implementation and management of VBP programs Early and continuous collection of data on implementation Methods, infrastructure support Researchers, policymakers, providers
    Limited generalizability of findings More experimentation and greater variation in VBP Data, methods Researchers, policymakers, providers
    Lack of meaningful outcome measures Improved methods for risk adjustment, data validation, and measurement composition Data, methods Policymakers, providers, researchers
    Lack of integrated and aggregated data Support for EHR and HIT systems Infrastructure support Policymakers, providers
    Limited ability to synthesize learning from diverse VBP efforts Better practices and methods for synthesizing VBP program findings Methods, infrastructure support Researchers, policymakers, providers

    Most of these recommendations are sensible.  For instance, including data ‘checks’ to ensure valid collection of data would be useful.   Some suggestions, however, are more controversial.  In particular, the authors ask for “more experimentation and greater variation in VBP.”  Experimentation involves a tradeoff, however.  If I was a patient at a hospital under a VBP system, I would hope that the VBP program would be optimized given the current state of knowledge.  Experimentation could of course produce a superior system, but it could also create a worse one.  Thus, although increasing variation in VBP implementation would help researchers learn more and better understand if and under what circumstances VBP works, payers have a duty to make sure patient care is also optimized in the short-run.

    The authors give the example of Geisinger Health System’s ProvenCare which offers a single-episode price for CABG surgeries.  Geisinger’s integrated health system likely contributed to the success of this program.  In more decentralized health systems, should the goal be to implement a ProvenCare replica to see if it works in other settings or to design a VBP that is more tailored to the needs of the specific patients and providers it serves.  I’d tend to side with the latter strategy.

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    Medicare Hospital Value-Based Purchasing

    December 7, 2010 in Hospitals, P4P, Quality | 4 comments

    The Health Reform (ACA) legislation mandated Medicare establish a hospital value-based purchasing (VBP) program by 2012.  In fact, the Deficit Reduction Act of 2005 already authorized Medicare to develop a plan to implement VBP for 2009.   How will they do this?  A CMS report from 2007 sheds some light on the topic.

    Since 2005, Medicare began the Reporting Hospital Quality Data for Annual Payment Update (with the incredibly unintelligible acronym of RHQDAPU).  RHQDAPU at first just required hospitals to report quality measures.  The Health Reform VBP initiatives, however, will begin to pay hospitals based on their performance on these metrics.  The 2007 CMS report claims that any VBP plan should contain the following 7 components.

    1. A Performance Assessment Model that is used to score a hospital’s performance on a specified set of measures, generating a Total Performance Score for each hospital.
    2. Translation of the VBP Total Performance Score into an incentive payment.
    3. A measure development process, including selection criteria for choosing performance measures for the financial incentive, and candidate measures for VBP Program start.
    4. A phased approach to transition from RHQDAPU to VBP.
    5. Redesigned data submission and validation infrastructure to support the VBP Program requirements.
    6. Enhancements to the Hospital Compare website to support expanded public reporting of performance results.
    7. An approach to monitoring VBP impacts, including potential impacts on health disparities.

    Below I discuss aspects of hospital VBP in more detail.

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