provider pay for performance: is it crazy to pay more? when does it make sense?
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Provider Pay for Performance: Is it Crazy to Pay More? When Does it Make Sense?. March 7, 2005 Arnie Milstein MD, MPH Pacific Business Group on Health Mercer Human Resource Consulting [email protected]. A. Milstein 2005. - PowerPoint PPT PresentationTRANSCRIPT
March 7, 2005
Arnie Milstein MD, MPHPacific Business Group on HealthMercer Human Resource [email protected]
Provider Pay for Performance:Is it Crazy to Pay More?When Does it Make Sense?
A. Milstein 2005
A. Milstein © 2005 2
Time to Reward Clinical IT Adoptionand Other Performance Leaps?
A. Milstein © 2005 3
Our Urgent Need to Produce Health “Better, Faster, and Cheaper”
0%
2%
4%
6%
8%
10%
12%
2000 2001 2002 2003Year
An
nu
al P
erc
en
t C
ha
ng
e
Health Care Spending Average Hourly Wage
Annual Percent Changes per Capita in Health Care Expenditures and in Average Hourly Wages for Workers in All Industries, 2000 through 2003
Data are from Strunk and Ginsburg, 2004. Dental work by Dr. Milstein.
A. Milstein © 2005 4
Actual Reduction in Spending Trend Without Quality Compromises:Outswimming the Shark in Nevada
Per Capita Health Care Spending (Low Wage Hotel Workers in Nevada)
Initiation of new
navigational tools and incentives
vs. 12% trend
A. Milstein © 2005 5
Success Required Two New MD Performance Measurements(a real MD distribution from a comparatively efficient city;also applies to care management & treatment options)
Adapted from Regence Blue Shield
Low Longit. EfficiencyLow Quality(Nightmare Suppliers)
MD
Qu
ali
ty I
nd
ex
(ou
tco
me
s o
r %
ad
he
ren
ce
to
EB
M)
High Longit. EfficiencyHigh Quality(Dream Suppliers)
High Longit. EfficiencyLow Quality
Low Longit. EfficiencyHigh Quality
L
ow
er
Hig
he
r
50th %ile
50th %ile
Lower Longit. Efficiency/ Higher Cost
Higher Longit. Efficiency/ Lower CostMD Longitudinal Cost Efficiency Index AKA “TCO”
(average total cost per acute episode or year of chronic care)
A. Milstein © 2005 6
Inducing Rapid and Continuous IT-enabled Re-Engineering of Health “Production” is the only Alternative to Social Divisiveness
MD Longitudinal Cost Efficiency Index(total cost per case mix-adjusted treatment episode)
MD
Qu
ali
ty I
nd
ex
(ou
tco
me
s o
r %
ad
he
ren
ce
to
EB
M)
High Longit. EfficiencyHigh Quality(Best)
High Longit. EfficiencyLow Quality
Low Longit. EfficiencyHigh Quality
L
ow
er
Hig
he
r
50th %ile
50th %ile
Lower Longit. Efficiency/ Higher Cost
Higher Longit. Efficiency/ Lower Cost
Adapted from Regence Blue Shield
Continuous Efficiency Gains
Offset Cost of Medical Miracles
Low Longit. EfficiencyLow Quality(Worst)
A. Milstein © 2005 7
A Purchaser and Consumer Near-Term Vision: High “PPSI”(PPSI=Provider Performance Sensitivity Index)
Performance comparisons for hospitals, MDs &
treatments
Market sensitivity to hospital & MD performance
Clinical re-engineering by MDs, hospitals &
hlth risk reductn programs
Q 50 ppts
$ 40 ppts
Va
lue
fro
m H
ea
lth
Be
ne
fits
S
pe
nd
ing
(H
ea
lth
Ga
in /
$)
Evolutionary Path
High
Low
2002 2012
Performance Transparency
(Quality & Cost Efficiency)
Consumerism (Tiered Plans w or w/o Spending Accounts)
& P4P “PRN”
Chasm Crossing
Americans
Q = % adherence to evidence-based rules
$ = Per capita health care spending. Includes new investment in IT / industrial engineering capability. Excludes impact of inflation, aging and biomedical innovation
A. Milstein © 2005 8
A Nearly Identical IOM Vision
CARE SYSTEM RE-DESIGN IMPERATIVES
• Redesigned care processes• Effective use of information technologies• Knowledge and skills management• Development of effective teams• Coordination of care across patient conditions, services, and
settings over time• Use of performance and outcome measurement for continuous
quality improvement and accountability
CARE SYSTEM
Supportive market environment
• Safe• Effective• Efficient• Personalized• Timely• Equitable
Adapted from Crossing the Quality Chasm, IOM, 2001.
Organizations that facilitate the work of patient-centered teams
High performing patient-centered teams
EMPLOYERS OUTCOMES
GOVT & PLANS
A. Milstein © 2005 9
When is Paying Extra Not Crazy?
To jumpstart provider prioritization of performance management & required infrastructure (industrial engineers & IT)
To motivate provider oligopolists
To overcome the practical, psychological & ethical limits of health care consumerism
To help form a critical mass of regional purchasers
(Per Deming, utilize P4P a last resort)
A. Milstein © 2005 10
A Provider IT Reward Contingency Sequence That Makes Sense to Purchasers(In Partnership with CMS)
2003: Meets AHRQ/CMS/Leapfrog PODS/CPOE leaps or NCQA PPC certification
2004: Achieves additional locally-specified e-health capabilities (eg IHA, BTE, insurers)
2006: Uses CCHIT certified product
2006: Uses CCHIT certified product and achieves highest level of CSI specified connectivity
2006: Passes Leapfrog/AHRQ CPOE challenge test
2007: Performs in top quartile on aggregate measures of quality and longitudinal cost efficiency
A. Milstein © 2005 11
How Soon Can We Reduce P4P? How Soon Will Congress…
Speed universal provider performance transparency via exchange of CMS claims data with private sector plans, subject to strict patient privacy protection?
Encourage all U.S. health benefits plans to tailor consumer cost-sharing to the “TCO” and quality of individual physicians, hospitals, and treatment options (via CMS, tax and/or competition policy)?
Increase the sensitivity of all U.S. plans’ cost-sharing to provider performance (especially individual MDs) until America steadily outswims the shark?