Medicare’s Healthcare Quality Incentive Strategies

Sheila H. Roman, MD, MPHSheila H. Roman, MD, MPHTrent Haywood, MD, JDTrent Haywood, MD, JD

CMSCMSSeptember 27, 2005September 27, 2005

Overview of Today’s Presentation

• CMS focus on public reporting and pay CMS focus on public reporting and pay for performance demonstrationsfor performance demonstrations

• MB Update in MMAMB Update in MMA• Hospital Quality Incentive Hospital Quality Incentive

Demonstration with Premier, Inc.Demonstration with Premier, Inc.

Calls for Medicare to Provide Payment for Quality • IOM report 2002IOM report 2002• Health Affairs article, former HCFA Health Affairs article, former HCFA

administrators, 2003administrators, 2003• MedPAC report 2004MedPAC report 2004• Private sector effortsPrivate sector efforts

• Bridges to ExcellenceBridges to Excellence• Leapfrog GroupLeapfrog Group

Medicare Demonstrations

• A demo is a way for CMS to send a new A demo is a way for CMS to send a new message, to test new payment methodsmessage, to test new payment methods

• Medicare demonstrations linking payment Medicare demonstrations linking payment to qualityto quality• Premier hospital quality incentive demoPremier hospital quality incentive demo• Care management performance demoCare management performance demo• Physician group practice demoPhysician group practice demo

Hospital Quality Alliance (HQA): Improving Care Through

InformationEnd-game:End-game:• excellent quality careexcellent quality careTo get there:To get there:• one robust, nationally standardized and prioritized one robust, nationally standardized and prioritized

set of measures reported by every hospital in the set of measures reported by every hospital in the country, accepted by all purchasers, overseers and country, accepted by all purchasers, overseers and accreditors;accreditors;

• Collaborations, standardization, oversight, Collaborations, standardization, oversight, incentivesincentives

Differential Marketbasket payment update, sec. 501• ““each subsection (d) hospital shall submit to the each subsection (d) hospital shall submit to the

Secretary quality data (for a set of 10 indicators Secretary quality data (for a set of 10 indicators established by the Secretary as of November 1, established by the Secretary as of November 1, 2003) that relate to the quality of care furnished by 2003) that relate to the quality of care furnished by the hospital in inpatient settings in a form and the hospital in inpatient settings in a form and manner, and at a time, specified by the Secretary.”manner, and at a time, specified by the Secretary.”

• If such hospital does not submit data…”the If such hospital does not submit data…”the applicable (payment) percentage increase … shall applicable (payment) percentage increase … shall be reduced by O.4 percentage points”be reduced by O.4 percentage points”

Hospital Public Reporting

434

1407

1952

4043 4192

August, 2003 February,2004

May, 2004 October, 2004 March, 2005

Number of Reporting Hospitals

HQA: Current Status

• ““Starter set” of 10 measures (bolstered by Starter set” of 10 measures (bolstered by MMA market basket payment update MMA market basket payment update incentive to PPS hospitals)incentive to PPS hospitals)• Over 4,000 hospitals reported in Over 4,000 hospitals reported in

November, 2004November, 2004• More clinical measures (10 to 17 to 20 More clinical measures (10 to 17 to 20

through September 2005)through September 2005)

• The first national project to measure The first national project to measure hospital performance and offer additional hospital performance and offer additional Medicare payment for top quality careMedicare payment for top quality care• ““Pay for quality”Pay for quality”

• Can economic incentives effectively Can economic incentives effectively improve quality of care?improve quality of care?

CMS/Premier Hospital Quality Incentive Demonstration Project

HQID Hospital Participation

• VoluntaryVoluntary• Eligibility: Hospitals in Premier Perspective Eligibility: Hospitals in Premier Perspective

system as of March 31, 2003 system as of March 31, 2003 • 278 hospitals participating278 hospitals participating• Demonstration Project: Pilot test of conceptDemonstration Project: Pilot test of concept• May be expanded in the futureMay be expanded in the future

CMS/Premier HQI – Over 270 National participating hospitals

HQID: Expanded Set of Measures• Use of 34 measuresUse of 34 measures• Expands 10 measure “Starter Measure Set” Expands 10 measure “Starter Measure Set”

in HQAin HQA• Drawn largely from NQF endorsed hospital Drawn largely from NQF endorsed hospital

performance measure setsperformance measure sets• Uses both process and outcome measuresUses both process and outcome measures• Includes 2 AHRQ PSIsIncludes 2 AHRQ PSIs

• A three-year effort linking payment with A three-year effort linking payment with quality measures quality measures (launched October, 2003)(launched October, 2003)

• Top performers identified in five clinical Top performers identified in five clinical areasareas• Acute Myocardial InfarctionAcute Myocardial Infarction• Congestive Heart FailureCongestive Heart Failure• Coronary Artery Bypass GraftCoronary Artery Bypass Graft• Hip and Knee ReplacementHip and Knee Replacement• Community Acquired PneumoniaCommunity Acquired Pneumonia

Indicators within AMI, Indicators within AMI, CABG, HF, and CAP CABG, HF, and CAP represent all patients (all represent all patients (all payers). Hip and knee payers). Hip and knee replacement indicators replacement indicators apply only to Medicare apply only to Medicare patients.patients.

HQI demonstration project

HQID Hospital Scoring• Hospitals scored on quality measures related to Hospitals scored on quality measures related to

each conditioneach condition• Individual measures “rolled-up” into overall Individual measures “rolled-up” into overall

composite score for each conditioncomposite score for each condition• Composed of two components:Composed of two components:

• Composite Process RateComposite Process Rate• Risk-Adjusted Outcomes IndexRisk-Adjusted Outcomes Index

• Categorized into deciles by condition to Categorized into deciles by condition to determine top performersdetermine top performers

The Hospital Quality Incentive Demonstration• Bonuses for top 2 deciles for each conditionBonuses for top 2 deciles for each condition

• Top decile given 2% bonus of their Top decile given 2% bonus of their Medicare DRG payments for that Medicare DRG payments for that condition condition

• Second decile given a 1% bonusSecond decile given a 1% bonus• Possible penalty in third year if below Possible penalty in third year if below

baseline thresholdbaseline threshold

HQID: Year 3 Quality Score Must Exceed Baseline• Demonstration baselineDemonstration baseline

• Clinical thresholds set at year one threshold scoresClinical thresholds set at year one threshold scores• Lower 9Lower 9thth and 10 and 10thth deciles deciles

• If performance in year 3 does not exceed baseline, If performance in year 3 does not exceed baseline, hospital will receive payment penaltyhospital will receive payment penalty• 1% lower DRG payment for conditions below 91% lower DRG payment for conditions below 9thth

decile baseline leveldecile baseline level• 2% lower DRG payment for conditions below 102% lower DRG payment for conditions below 10thth

decile baseline leveldecile baseline level

Anticipated payment scenario

1st Decile

Hospital

Hospital

Year One Year Two Year Three

Top Performance Threshold

Payment Adjustment Threshold

2nd Decile

3rd Decile

4th Decile

5th Decile

6th Decile

7th Decile

8th Decile

9th Decile

10th Decile

1st Decile

2nd Decile

3rd Decile

4th Decile

5th Decile

6th Decile

7th Decile

8th Decile

9th Decile

10th Decile

1st Decile

2nd Decile

3rd Decile

4th Decile

5th Decile

6th Decile

7th Decile

8th Decile

9th Decile

10th Decile

Condition XCondition X Condition X

Payment Incentive

Payment Incentive

Payment Incentive

Payment Adjustment - Year 3

CMS/Premier HQI ProjectAlready showing improvement

Composite Quality Score: Quarterly Median Improvement by Focus AreaPremier / CMS Hospital Quality Initiative Participants

October 1, 2003 - September 30, 2004Preliminary Results

70.0%

64.1%

84.9%

89.9%

85.7%

90.5%*

76.2%*

80.0%*

92.6%*90.0%*

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

AMI CABG Pneumonia Heart Falure Hip and Knee

Clinical Focus Area

Com

posi

te Q

ualit

y Sc

ore

4Q-03

1Q-04

2Q-04

3Q-04

* Improvement in Composite Quality scores between 4Q-03 and 3Q-04 are significant at the p < = .001 level * Based on a paired sample t-test of the mean scores for the same time periods

CMS/Premier HQI ProjectReduction in Variation

AMI Composite Quallity Score Distribution

Time Periods:4Q03 - 2Q04

2Q041Q044Q03

Com

posi

te Q

ualit

y S

core

120

100

80

60

• Positive trend in both Positive trend in both upper and lower scores upper and lower scores

of rangeof range• Reduction in variance Reduction in variance

(narrowing of range)(narrowing of range)• Median moving Median moving

upwardupward

Challenges to Incentives for Quality Performance

• Selection of measures/off label use of measuresSelection of measures/off label use of measures• Dynamic measurement environmentDynamic measurement environment• Measures maintenanceMeasures maintenance• Hospital Burden Hospital Burden • Unintended consequencesUnintended consequences• Time lagsTime lags• Validation/Scoring methodologyValidation/Scoring methodology• Need for proof of effectivenessNeed for proof of effectiveness

Next Frontiers

• Measurement of other dimensions of qualityMeasurement of other dimensions of quality• Scoring methodologiesScoring methodologies• BenchmarkingBenchmarking• Incentives/Payment for qualityIncentives/Payment for quality• Health Information TechnologyHealth Information Technology• Improve health care systemsImprove health care systems

Thank you!

Sheila H. Roman, MD, MPHSheila H. Roman, MD, MPH410-786-6004410-786-6004

sheila.roman@cms.hhs.govsheila.roman@cms.hhs.gov