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Appropriate use of financial incentives designed to influence the clinical-decision making of providers

ECS 154 Social and Behavioral Determinants of Health

September 30th, 2012

Soraya Ghebleh

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Table of Contents

Introduction ....................................................................................................................... 1 Problem Statement and Magnitude ................................................................................ 1

Community of Interest ..................................................................................................... 2 Key Determinants ............................................................................................................. 3

Intervention ....................................................................................................................... 5 Conclusion ......................................................................................................................... 6

References .......................................................................................................................... 7 Appendix A. Socio-Ecological Conceptual Model ........................................................ 10

Appendix B. Logic Model for Intervention .................................................................. 11 Appendix C. Example Incentive Programs for Small and Large Providers ............. 12 $

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Introduction

Clinical decisions of providers are one of the core factors influencing healthcare

outcomes and are often directly tied to the financial incentives and reimbursement

strategies established within a provider setting.1 The current state of healthcare in the

United States is one of extremely high expenditure without a clear corresponding increase

in quality.2 The Institute of Medicine’s six aims for improving quality in healthcare

delivery fall under the categories of safety, effective, patient-centered, timely, efficient,

and equitable healthcare.3 In order to accomplish these goals, financial incentives must be

aligned with quality and performance measures and these measures must derive from

meaningful data collection.3-6 Financial incentives for providers are an increasingly

popular way to attempt to influence overall healthcare outcomes but the efficacy of these

incentives must be continuously examined to prevent a further waste of resources and the

use of direct financial incentives needs to be cautiously implemented based on evidence.7

Problem Statement and Magnitude

Determining whether financial incentives for providers are an effective means of

improving healthcare outcomes for patients and reducing inefficiencies within our

healthcare system is a multi-faceted issue. The current system of fee-for-service delivery

drives high healthcare costs because the incentive lies in performing more services but

does not necessarily increase quality.8 The sheer magnitude of financial incentives that

could potentially be introduced to various provider settings makes choosing the

appropriate incentive or combination of incentives an onerous task.9 One difficulty lies in

the fact that despite one successful implementation, the replication of similar results in

other provider settings is not assured.10 Applicability of incentives that work in a large

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provider system may not translate to a solo or small group practice.5 Ensuring that

smaller practices and individual providers are not lost in the transition towards

accountable care organizations that involve high start-up capital and advanced healthcare

technology is a concern for many practices around the country.6

Current methods of reimbursement include capitation, fee for service, pay-for-

performance, and under accountable care organizations there is the shared savings

model.9,11 Most financial incentives are contained within these reimbursement systems or

they are used in addition to existing reimbursement schemes.12 Defining the parameters

of success of a financial incentive program when there is no universal definition of what

constitutes a successful intervention or an increased measure of quality can make

determining effectiveness difficult and often unclear.13 There are also numerous players

that may need to collaborate for successful incentive programs that include providers,

insurance companies, beneficiaries, and government agencies and stakeholders.4

Community of Interest

Providers are the target population for financial incentives aimed at improving

quality and reducing cost. Healthcare systems in both developed and developing nations

have had mixed results with use of financial incentives, indicating that there are potential

implications with regard to the ethnicity and cultural background of the providers.14,15

There is also a distinction between providers that work in self-owned practices and small

group practices compared to providers that are in a large provider network or a part of an

accountable care organization.16,17

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Key Determinants

Biology

The biological makeup of providers varies widely and can directly affect how

they respond to financial incentives to deliver care. Specific indicators include the age of

the physician, where the physician went to school and trained, gender, religious

background and upbringing, value system, ethnic background, socioeconomic

background, and any personal biases that may exist.9,18

Behaviors

Provider behaviors implicated in decision making include prescribing habits,

personal work ethic and amount of time spent in preparation, numbers of tests ordered for

patients, physician self-monitoring, personal spending habits, and the size of the

workload the physician chooses to take on.19,20 The target income level of the provider

will affect whether a financial incentive would be an important factor tying directly into

family financial obligation.21,22 There is also an implicit assumption that all providers

practice in the best interest of their patient.20

Social Environment

The provider setting dictates the structure and the magnitude of incentive that will

be given to the provider. Different settings include hospitals, clinics, ambulatory care

centers, offices, and nursing homes.10 The organizational structure and culture of the

provider setting can affect the success of incentives and the proportion of the group to

which the incentive is relevant. If performance measurements set by the provider setting

and incentives are aligned with these outcomes, a provider’s decision to participate may

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change with an increasingly congruent plan.23 The specialty of the provider is also

important in whether incentives will be effective.

Physical Environment

The access of the provider to the tools necessary to improve quality is important.

Providers practicing in rural or impoverished areas may have very different responses to

incentives than providers practicing in urban or in higher income locations.24 Different

geographic locations are often tied in with different patient populations who have

different diseases and these are also factors providers react to when providing care.25

Policies and Interventions

The structure of the incentive is crucial to provider participation.16 Government

policy factors include government insurance reimbursements from Medicare and

Medicaid. Provider adherence to clinical guidelines set by academic institutions and what

the status quo of quality provision is among a provider community are both indicators of

the likelihood of incentives working within that provider community.26 The introduction

of the Patient Affordable Care Act will have huge implications for providers if the

methods of reimbursement change and shared savings models begin to dominate the

healthcare arena.27

Access to Quality Health Care

The lack of reimbursements and the inability of many patients to pay their

copayments and deductibles have led to an endemic increase in over-testing, over-

prescribing, and over-diagnosing.28 Providers don’t necessarily need incentives to

provide increased access to quality care but under current reimbursement schemes they

have more of an incentive to increase quantity and this has increased the cost burden.29

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Intervention

Financial incentives designed to change clinical behavior will not be successful

in every setting and successful interventions will take into consideration certain factors

before planning an incentive for providers.30 Financial incentives should be used in

extremely defined settings for defined problems within defined populations where

measurable results can be produced indicating movement towards a desired increase in

quality.17,31,32 An advantage large provider settings have compared to small provider

settings is the ability to assume more risk, higher capabilities for infrastructure and

technology implementation, and a larger pool to measure performance improvement and

quality metrics.4,25,33 This is important when evaluating whether a provider setting is able

to participate in shared savings models.6 There are interventions, however, that can work

in both small and large provider settings. (Refer to Appendix C) Examples of this are

absolute threshold, directly measurable incentives like increased vaccinations, reduced

repeat unnecessary lab tests, and increased cancer screening.20

Incentives of any kind should be explicitly described and known to providers and

they should be aware of what entity is paying for the intervention.34 Determining short-

term goals as compared to long-term goals is important when coming up with metrics of

success for the incentive.21,35 Different metrics that should be considered for examination

should include the provider population providing the data, the percentage of patients

being targeted for the incentive, the expected overall effects of the incentive, and the type

of feedback given.9,36-38 On the reverse side of financial incentives, financial risks and

penalties may also serve to influence and change physician behavior.13 A large emphasis

on financial incentives within a setting can potentially decrease intrinsic motivation when

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amplified by organizational pressure.39 The ACO model of financial incentives under

shared savings is an example of a financial incentive that ties cost reduction directly with

quality improvement and shared savings but within ACO models the geographical region,

technology capabilities, already-existing infrastructure, quality metrics, stakeholders, and

provider organizational culture will determine whether an ACO model should be

implemented or not.27,34,40,41

Conclusion

$ Financial incentives are not going anywhere and will continue to be implemented

in a variety of healthcare settings. In order for these incentives to be utilized properly, the

healthcare community needs to understand that financial incentives and reimbursement

strategies are provider and setting specific and implement incentives accordingly.

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Appendix A. Socio-Ecological Conceptual Model

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Appendix B. Logic Model for Intervention

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Resources

1. Medicare/Medicaid Data (Dartmouth Atlas)

2. Provider Setting (ex: Geisinger System, Accountable Care Organizations)

3. Insurance Companies

4. State Government Initiatives/Funding

Outputs 1. # Rate Reduction of unnecessary tests 2. # Meetings between administrators and providers

3. # Performance Reports and # Data Metrics Shared 4. #Incentivized Clinical Actions (ex childhood vaccinations, cancer screening tests, STD tests, physical examinations, flu shots)

Outcomes 1. Reduced excess expenditure and waste in provider setting (ex reduced # of repeat lab/imaging tests ordered)

2. Financial incentives aligned with quality measures agreed upon by providers and administration as a result of increased communication

3. Faster, more streamlined reimbursement for providers in conjunction with a reduction in unnecessary payment for extra tests

4. Increased amount of specific, commonly required/necessary services provided more frequently and enthusiastically by providers

Logic Model: Financial Incentives meant to change Provider Behavior resulting in improved quality and reduced cost

Assumptions: Providers want best possible outcomes for patients while being reward financially for delivering high quality healthcare

External Factors: Payment methods to providers affects their clinical decision making; changes in decision making may lead to decreased cost and increased quality

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Activities 1. Examining high cost tests and comparing results to increased health value

2. Physician engagement in planning relevant payment strategies and looking at implementing incentive programs in environments proven to work

3. Improving feedback loop and dialogue between providers and insurance companies for effective reimbursement

4. Choosing specific goals to be incentivized for providers in alignment with government health goals

Impact 1. Overall cost burden of healthcare system reduced

2. Integration between providers and administration directed at successful incentive programs 3. Shift from over-utilization of resources and resistance of reimbursement from insurance companies to alignment of goals between providers and insurance companies 4. Improved local and state health outcomes for the patient population of provider’s receiving incentives

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Appendix C. Example Incentive Programs for Small and Large Providers

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