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Rewarding Provider Performance: Aligning Incentives in Medicare Index A Access to care performance measurement and, 6 potential adverse consequences of payment incentives, 4–5, 29, 48–50 Accountability for coordination of care, 120–121, 123–124 goals of payment system reform, 8 public reporting for, 10–11, 103–104, 106 Administrative data, 88, 103 Adverse consequences of pay-for-performance system causes, 22, 28, 29 inequitable or decreased access, 29, 48–51 managing to measures, 29, 51 monitoring rationale, 4–5, 48, 53, 54 obstacles to knowledge transfer and innovation, 4–5, 29, 51–52 potential scope of, 4–5, 48 provider attitudes and perceptions, 52–53 quality of care, 9, 29 Agency for Healthcare Research and Quality, 126 Ambulatory care, 212–215 Ambulatory care Quality Alliance, 39, 179 Ambulatory payment classification, 146 American Health Information Community, 126 Anthem Blue Cross and Blue Shield, 22 of New Hampshire, 41, 62 B Bridges to Excellence, 40–41, 62, 67 Physician Practice Connections, 41 Bundled payments, 4, 26, 33, 35, 145 C Case management, 33 Centers for Medicare and Medicaid Services current payment incentive programs, 3, 62 leadership for health care improvement, 28, 137 performance reporting program, 11–12 recommendations to improve coordination of care, 13, 122 See also Medicare Certification and licensure Medicare provider qualifications, 25 payment incentive programs and, 5

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Rewarding Provider Performance: Aligning Incentives in Medicare Certification Commission for Healthcare Information Technology, 128 Chart data, 88, 103 Chronic heart failure, 180 Clinical quality as basis for performance reward distribution, 81–83, 95–96 goals of payment system reform, 3, 20, 21–22, 44 Collaborative efforts, 39 Competition, in health care delivery system, 29, 52 Connecting for Health, 126 Consolidated Health Informatics, 126 Consumer Assessment of Healthcare Providers and Systems, 87, 109, 209–219 Coordination of care accountable source of care, 120–121, 123–124 beneficiary role in, 123–124 goals of payment system reform, 3, 8, 45 importance of, 124 performance measurement, 45 rationale, 13 recommendations, 13, 122 rewards for, 123 shortcomings of current delivery system, 1, 4, 33, 45, 119–120 Coronary artery disease, 180 Cost of care consumer spending, 18–19 federal spending, 24 goals of payment system reform, 3, 21–22 health information technologies, 127 hospital management strategies, 145–146 international comparisons, 19 Medicare spending, 4, 24 quality of care and, 19 Cost shifting behavior, 53–54 Crossing the Quality Chasm: A New Health System for the 21st Century, 1, 15, 71, 81 D Data collection and management data auditing, 103 health information technologies, 124–129 limitations of current efforts, 88–89 Medicare data collection efforts, 43 Medicare demonstration projects, 38–39 pay-for-performance implementation, 5, 13, 103 provider feedback, 103 for quality improvement, 13 recommendations for, 14, 128–129 See also Performance measurement; Public reporting Demonstration projects, 3, 14, 22, 38–39, 139–140 Department of Health and Human Services current payment incentive programs, 3 information technology promotion, 14, 126, 128–129 monitoring of pay-for-performance program, 14, 134 public reporting role, 10–11, 106 recommendations for, 6, 8, 10–11, 12, 14, 55, 78, 85, 106, 116–117, 128–129, 134 Diabetes, 19, 180 Diagnosis-related groups, 145–146 Dialysis, 19 Dialysis facilities Medicare prospective payment system, 148–149, 208 Medicare spending, 19 pay-for-performance implementation, 110, 209–211 performance measurement, 208–209 Diffusion of knowledge and best practices health information technologies, 124–128 payment incentive program as obstacle to, 29, 51–52 Disease management models, 38–39 Distribution of rewards to ambulatory care settings, 215 among Medicare parts, 97 beneficiary rewards, 44–45 by care settings, 118–119 composite measures for, 89–90 condition-based system, 89 data collection for, 88–89 defining comparison groups for, 94–95 to dialysis facilities, 211 domains of care as basis for, 9, 81–83, 95–96, 100–101 existing funds model, 66–69 generated savings model, 69–71

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Rewarding Provider Performance: Aligning Incentives in Medicare graduated vs. fixed reward amounts, 92–93 to high-performing providers, 41, 84, 85, 101 level of award necessary to affect behavior, 46–47 measure sets for, 85–88 penalty system, 93–94 performance improvement as basis for, 9–10, 83–85, 100–101 policy issues, 8, 80–81, 101 private sector pay-for-performance programs, 40–41, 62 provider payout case example, 97–100 to providers meeting performance thresholds, 90–91 public reporting and timing of, 107 recommendations, 9, 82, 85 size of reward, 100 structural measures for, 90 tournament-style reward structure, 91 for treatment of high-risk patients, 50, 129 E Educational interventions current payment system, 25 shortcomings of current payment system, 4 shortcomings of Medicare reimbursement, 33 Effectiveness of care, 1, 81 See also Clinical quality Efficiency of care aims, 1, 81 as basis for performance reward, 81–83, 95–96 goals of payment system reform, 21–22 performance measurement, 6, 51, 209 recommendations for payment incentive program design, 9, 82 shortcomings of current payment system, 4 Electronic health records, 6, 88, 124, 125, 127–128 Equitable care aims, 1, 81 potential adverse consequences of payment incentives, 4–5, 50–51 Excellus Blue Cross Blue Shield, 72 F Fee-for-service system, 34 Funding for payment incentives budget-neutral approaches, 65 challenges to establishing, 61–62 criteria for assessing possible sources, 60, 64–65 direct investment model, 71–74, 75 existing funds model, 66–69, 75, 77, 78 generated savings model, 69–71, 75, 78 geographic pools, 77, 95 long-term, 77–78 performance reporting incentives, 106 potential sources, 7, 61 private sector models, 62 public sector models, 62 recommendations, 7–8, 75, 78 research needs, 75 reward pool design, 60–61, 65, 67, 75, 78 reward size and, 100 short-term implementation, 65–66, 74–75 significance of, for pay-for-performance implementation, 6, 60–61 single source of, 8 United Kingdom program, 63–64 H Harvard Pilgrim Health Care, 62 Hawaii Blue Cross and Blue Shield, 22 Healthcare Information Technology Standards Panel, 126 Health Insurance Portability and Accountability Act, 13, 124 Health maintenance organizations, 41 HealthPartners, 73 Health plan care pay-for-performance implementation for, 215–216 Health Plan Employer Data and Information Set, 39–40, 87 Heart/Stroke Physician Recognition Program, 41 Hemodialysis. See Dialysis High-performing providers basis for distribution of incentive rewards, 84 recommendations for monitoring, 14, 134

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Rewarding Provider Performance: Aligning Incentives in Medicare recommendations for reward distribution, 9–10, 85 relative comparisons, 91 Hill Physicians Medical Group, 41 Home health agencies Medicare prospective payment system, 34–35, 147–148 Medicare public reporting efforts, 104, 105 pay-for-performance implementation, 11, 110, 217–218 performance measurement, 148, 216–217 Hospital Quality Alliance, 39 Hospitals health information technologies, 125 Medicare prospective payment system, 34–35, 37, 145–146 Medicare public reporting efforts, 105 Medicare qualifications, 25 pay-for-performance implementation, 11, 110, 211–212 performance measurement, 211 I Implementation of payment incentives in ambulatory care settings, 213–215 benefits of collaboration, 39 challenges, 23 delayed approach, 108–109 in dialysis facilities, 110, 209–211 funding pool considerations, 60–61, 65 health information technologies in, 13–14, 124–129 in home health care, 11, 110, 217–218 in hospitals, 110, 211–212, 217–218 Medicare restructuring to foster nationwide change, 27–28 monitoring, 12, 23, 44, 53, 54, 133–134 organization size as factor in, 115, 117 participation requirements, 112–116 performance measures, 6, 110–111 phased approach, 5, 6, 28, 29, 55, 107, 110, 117 procedural and technical issues, 101, 102 public reporting of performance outcomes, 10–11, 103–106 recommendations, 6, 12, 29–30, 32–33, 54–55, 75 research needs, 23 short-term funding models, 65–75 in skilled nursing facilities, 111–112, 219 specialist participation, 117–118 speed of, 112–117 steps involved in, 103–107 timing, 101, 107–110 variation across settings, 11–12, 27, 110–112, 116–117 See also Funding for payment incentives Infant mortality, 19 Innovation goals of payment incentives, 3 potential adverse consequences of payment incentives, 4–5, 52 Integrated Healthcare Association, 22, 39–40, 62 International comparisons, 19 See also United Kingdom L Learning organizations, 135–137 Learning system, 6, 14, 54, 55–56, 133–134, 135–137 Life expectancy, 19 Longitudinal measures of quality, 12, 18, 116 M Massachusetts Blue Cross Blue Shield, 62 Medicare current payment system, 4, 22, 23–26, 33–34, 55 current public reporting efforts, 104–105 data collection, 43 distribution of rewards among component parts, 97 expenditures, 4, 24, 35 financing, 23 funding for payment incentives, 7–8 future challenges, 20 hemodialysis spending, 19 implementation of payment incentives, 6, 23, 27–28, 55 influence of, in health care system, 26, 28, 43 model reward distribution using existing funds, 67 pay-for-performance rationale, 5, 43 performance reporting requirements, 112–115

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Rewarding Provider Performance: Aligning Incentives in Medicare Physician Fee Schedule, 35 program assessment role, 136 prospective payment system, 34–35, 38, 145–151 provider qualifications, 25 Quality Improvement Organization, 18 recent pay-for-performance experiments, 38–39 recommendations for pay-for-performance implementation, 6, 55 retrospective payment system, 34 scope of participation and benefits, 4, 23–24, 28, 147 utilization patterns and trends, 13, 19, 119 See also Centers for Medicare and Medicaid Services Medicare Advantage program, 4, 11, 24, 33, 105, 110, 150–151 Medicare Management Performance Demonstration, 38–39 Medicare Payment Advisory Committee, 67, 110, 146, 180 Medicare Prescription Drug, Improvement, and Modernization Act (2003), 2, 17, 39, 148 Medicare’s Quality Improvement Organization Program: Maximizing Potential, 2, 18, 135 Medicare Trust Funds, 7 Monitoring of payment incentive programs for distribution of rewards, 8 learning system approach, 6, 14, 54, 55–56, 133–134, 135–137 payment incentive program implementation, 6, 12, 116–117 rationale, 4–5, 14, 23, 44, 48, 53, 54 recommendations, 14, 134 scope of, 133 technology for, 6–7 Mortality studies, 46 N National Commitee for Quality Assurance Diabetes Physician Recognition Program, 41 Heart/Stroke Physician Recognition Program, 41 Physician Practice Connections, 41 National Health Information Network, 126 National Quality Coordination Board, 18, 140 Nursing homes Medicare payment system effects, 38 Medicare public reporting efforts, 105 See also Skilled nursing facilities P Pathways to Quality Health Care, 2, 17, 44, 116 Patient-centered care aims, 1, 81 ambulatory care performance assessment, 213 as basis for performance reward, 81–83, 95–96 dialysis services assessment, 209 goals of payment system reform, 21–22 health plan performance assessment, 216 home health agency performance assessment, 217 hospital performance assessment, 211 measurement, 20 performance measurement considerations, 6, 51 recommendations for payment incentive program design, 9, 82 shortcomings of current payment system, 1 trends, 20 Pay for performance barriers to provider participation, 11–12, 116–117 beneficiary rewards, 44–45 common features of existing programs, 42–43 experiences outside of health care sectors, 47 goals, 3, 29, 32, 44, 55 for high-performing providers, 9–10, 85 to improve coordination of care, 13, 122 literature review, 154–167 performance improvement linkage, 2, 5, 17, 22–23, 26, 29, 36–37, 46 programs in United Kingdom, 42 quality improvement goals, 9, 20 recent experiments, 3, 22–23, 38–42 research needs, 139–141 research on program effects, 3, 36, 46–48

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Rewarding Provider Performance: Aligning Incentives in Medicare stakeholder position statements nonspecialist groups, 170–172 purchaser and consumer groups, 177–178 specialist groups, 173–176 in systemic approach to health care reform, 5–6, 20, 27, 28, 44, 55 See also Adverse consequences of pay-for-performance system; Distribution of rewards; Funding for payment incentives; Implementation of payment incentives Payment systems current Medicare, 23–26, 33–34 current shortcomings, 1, 4, 19–20, 25–26, 32, 33–34, 55, 80 effects on provider behavior, 37–38, 46–47 excessive focus on, in health system reform, 53 reform goals, 1–2 retrospective, 34 See also Prospective payment Penalties for lack of improvement, 93–94 Performance improvement absolute thresholds, 90–91 comparison groups, 94–95 defining, for distribution of incentive rewards, 83–85 payment incentive distribution methodology, 9–10 payment incentive goals, 44 payment system linkage, 2, 17, 22–23, 29, 36–38, 46 penalties for lack of, 93–94 recommendations for public reporting, 10–11 relative comparisons, 91 research needs, 6–7 rules for health care process redesign for, 15 strategies for, 18 technical assistance for, 18 Performance measurement case mix considerations, 129–130 common features of existing pay-for-performance programs, 42–43 composite measures, 89–90 of coordination of care, 45 costs, 112, 130 current measurement sets, 86 data limitations, 88–89 dialysis services, 208–211 domains of quality, 9, 21, 51, 81–83 in home health agencies, 216–217 in hospitals, 211 ideal characteristics, 134–135 improving provider participation, 11–12, 116–117 longitudinal measures, 12, 18, 116 pay-for-performance implementation, 6, 11, 103, 107, 108–109, 110–111 for payment system assessment, 2, 17, 23 in post-acute care settings, 148 potential adverse consequences of, 6, 29, 51 provider participation requirements, 112 provider resources for, 114 recent efforts, 20 recommendations for implementation, 17–18 recommendations for improvement, 2, 12 research needs, 137–139 selection of measures, 85–86 shortcomings of current system, 18, 20–21, 110 in skilled nursing facilities, 219 specialty care, 117–118 stakeholder collaborations for, 14 starter set, 86–88 statistical issues, 112, 129–130 structural measures, 90 threshold setting, 91–92 Performance Measurement: Accelerating Improvement, 2, 17–18, 51, 137–138 Physician Group Practice Demonstration, 38, 69 Physician–patient relationship, 29 Physician Practice Connections, 41 Physicians distribution of rewards, 118–119 Medicare prospective payment system, 34–35, 149–150 Medicare qualifications, 25 negative perceptions of payment system reform, 52–53 pay-for-performance implementation in private practice, 110 payment incentives as barrier to performance improvement, 29 virtual groups, 119

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Rewarding Provider Performance: Aligning Incentives in Medicare Population health international comparison, 19 patterns and trends, 19 significance of Medicare practices, 26 Preferred provider organizations, 41 Premier Hospital Quality Incentive Demonstration, 38 Preventive care shortcomings of current payment system, 1, 4 shortcomings of Medicare reimbursement, 33 Primary care, 4, 27, 43, 52–53, 73, 120 Priority Areas for National Action: Transforming Health Care Quality, 71 Private sector in collaborations for performance measurement, 14, 23 cost-shifting outcomes of payment system reform, 53–54 pay-for-performance funding models in, 62 pay-for-performance in executive compensations, 47 recent pay-for-performance experiments, 39–41 Prospective payment, 34–35, 37, 38 for home health care, 147–148 for inpatient hospital care, 145–146 Medicare programs, 145–151 for outpatient dialysis services, 148–149 outpatient hospital care, 145–146 for physician services, 149–150 shortcomings of current system, 4, 26 for skilled nursing facilities, 146–147 Public reporting access to care decreased by, 50 costs, 105–106 current Medicare efforts, 104–105 distribution of rewards and, 107 pay-for-performance implementation, 5, 10–11, 12, 103–106 quality of care and, 26 rationale, 103–104 Q Quality Improvement Organizations, 18, 52, 94, 128 Quality of care ambulatory care performance assessment, 213 consumer spending and, 19 current Medicare payment system and, 4, 25–26, 33–34 current shortcomings, 1, 15 dialysis services assessment, 208–209 domains of quality, 9, 21, 51, 95–96 health plan performance assessment, 215 home health agency performance assessment, 217 hospital performance assessment, 211 information technology to improve, 13 Medicare Advantage program, 150–151 Medicare provider qualifications, 25 payment system linkage, 3, 5 prospective payment system and, 146 public reporting of provider performance and, 26 recommendations for payment incentive program design, 9, 21–22, 82 See also Performance improvement; Clinical quality R Regional Health Information Organizations, 126 Relative value of medical services, 1, 25–26 Research long-term funding for payment incentives program, 75 needs of pay-for-performance program, 139–141 oversight, 140 pay-for-performance studies, 3, 36, 46–48 payment incentive implementation, 23 payment system effects on provider behavior, 37–38 performance measurement, 137–139 performance monitoring, 6–7 Retrospective payment system, 34 Risk adjustment, 48–50, 129–130 S Safety of care aims, 1, 81 as basis for performance reward, 81

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Rewarding Provider Performance: Aligning Incentives in Medicare Settings for care defining comparison groups for reward distribution, 94–95 distribution of rewards, 118–119 funding sources for payment incentive programs, 7, 8 health information technologies for, 125 implementation of pay-for-performance, 11–12, 27, 110–112, 116–117 Medicare prospective payment system, 145–151 Medicare spending, 35 performance measurement and, 11–12, 116–117 size of organizations, 115 Size of reward, 100 Skilled nursing facilities Medicare payment system effects, 38 Medicare prospective payment system, 34–35, 146–147 pay-for-performance implementation, 111–112, 219 performance measurement, 219 Social Security Act, 2, 17 Specialization implementation of pay-for-performance, 118 patterns, 117 pay-for-performance programs, 43 performance measurement, 117–118 shortcomings of current payment system, 4 Sustainable growth rate, 8, 35, 66, 68, 75, 149 T Technical assistance for quality improvement, 18 Timeliness of care, 1, 81 To Err Is Human: Building a Safer Health System, 15 U United Kingdom, 42, 63–64 Utilization consumer spending, 18–19 Medicare patterns and trends, 13, 19, 37, 119 shortcomings of current Medicare payment system, 25–26, 80 specialty care, 117 V Virtual groups, 119, 122–123