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Accenture

Pay-for-performance programs use incentives to encourage evidence-based practices that promotebetter outcomes and ultimately transform the healthcare system.

Health plans, large employers and government agencies are driving the move to a pay-for-performance (P4P) healthcare environment in the United States. P4P focuses on outcomes of healthcare treatment, essentially linking reimbursement to quality. Most organizations, however, are not prepared for the significant P4P reporting requirements. A key enabler of P4P goals is the implementation of an EHR to collect, track and deliver evidence of patient outcomes.

P4P Drivers

The use of P4P in healthcare is being driven principally by the purchasers of healthcare services, including health plans, large employers and government agencies. Provider participation in national and local P4P programs is on the upswing. Additionally the public is determined to address medical errors and patient safety.

Multiple industry studies focusing on medication errors and patient safety have uncovered a high incidence of problems. Moreover the current reimbursement system does not offer the best incentives to deliver quality, and in some cases has resulted in misaligned incentives among providers and payers. Providers do not have direct financial incentives to follow clinical practice guidelines. Many different payment structures have been tried, but none rewards preventive services or chronic care management. Fee-for-service approaches reward time and activity but penalize quality initiatives that reduce the length, intensity or frequency of service utilization. Capitation rewards efficiency, but fails to encourage innovative quality programs that require additional resources. Salary systems reward stability but do not distinguish between under- and over-utilization, and do not foster innovation.

As both public and private program purchasers emphasize a link between reimbursement and quality, P4P is being positioned as a provider payment methodology of the future.

Model Programs

There are several indications that the time is right for P4P in healthcare. According to a Med-Vantage study, as of November 2004, there were 84 P4P programs covering 39 million beneficiaries. By March 2005, there were 104 programs.* Based on continuing governmental, health plan and employer interest, as well as growing consumer demand and emerging new sponsors, some predict that the number of P4P program sponsors could reach 160 by 2006. (*“Source: Med-Vantage, San Francisco, CA, 2005 P4P National Study, www.medvantage.com")

A number of initiatives are under way to encourage and reinforce the delivery of evidence-based practices that promote better outcomes and ultimately transform the healthcare system.

The federal government is supporting P4P on several fronts. The Medicare Modernization Act financially encourages hospitals to report a standardized set of quality measures. The Centers for Medicare and Medicaid Services has initiated several pilot P4P programs. And Medicare recently launched a public website, Hospital Compare, that shows how most of the nation’s general hospitals perform compared with state and national averages, as well as against their peers on 17 widely accepted quality measures.

Other private organizations driving P4P initiatives include the Leapfrog Group, Bridges to Excellence, the Integrated Healthcare Association, and the Sharp Community Medical Group IPA.

Common Features

Many of the pay-for-performance programs in the market today are designed to align payment and quality, facilitate adoption of information technology (IT), and reduce clinical practice variation by creating an infrastructure for evidence-based medicine. Accordingly, they have several common features:

• Measures based on accepted evidence-based standards, developed with active involvement of clinicians and encompassing several dimensions: clinical outcomes, compliance with clinical process standards and cost management;
• Mechanisms for continuous improvement (versus meeting static thresholds);
• Specific incentives promoting the development of providers’ information systems and reporting capabilities. This is, in part, a recognition of the level of importance that the market is placing on the use of EHRs;
• Incorporation of a consumer component such as patient satisfaction measures; and
• Mechanisms to shift market share based on quality performance, such as decreased co-payments for patients who use high-quality providers and public reporting of quality performance data.

In general, pay-for-performance programs are placing increasing reliance on national norms and evidence-based medicine. There is a trend toward standardized, nonproprietary measures.While many of the measures in place are designed for use with chronic conditions, there is an emerging effort to develop a core set of measures that will be useful in primary care.

Technology Requirements

For the most part, health organizations today use a manual, paper-based approach to retrospectively report their performance on quality measures as specified by P4P programs. This approach is cumbersome, costly, labor-intensive and subject to errors. In addition, it does not facilitate changes to clinical decision making at the point of care. Particularly as P4P programs move beyond process-based to outcomes measures, reporting cannot be accomplished through manual means over the long term, and must eventually be supported through information technology.

To support the quality and patient safety requirements of pay-for-performance programs, secure information in data systems will need to be available in standardized electronic formats. Advanced business and clinical intelligence applications that compile discrete arrays of outcome and performance data must be developed. Healthcare providers will need to move from manual, paper-based processes to the adoption of longitudinal EHRs that enable them to collect, access and analyze patients’ information at the point of care. EHRs also provide tools and decision support to manage care. The availability of patient-level clinical data and information to care providers in multiple settings like skilled nursing, home care and the doctor’s office can decrease duplication of services and errors, and improve coordination of care.

The growing availability of clinical information technology is starting to make it possible for health organizations to gather the clinical data necessary to administer sophisticated P4P programs. But in developing EHR to make P4P work, providers run into a number of barriers and questions.

The technology infrastructure to support interconnection among hospitals, physicians, inpatient and outpatient services, independent labs and test centers, home health agencies and other parts of the healthcare provider community is sorely lacking. For P4P to work, all those providers need some level of timely access to consistent and current patient information. This access will improve the ability to manage care across the continuum, reduce redundancies in testing, identify patient clinical trends and evaluate outcomes of hospital care in a post-acute environment.

At present there are no good systems, applications or processes in place that allow the required information to be captured readily and consolidated or warehoused in a manner that meets reporting requirements. Under most current records systems, almost all patient information must be pulled manually from disparate applications, compiled and put into a form accepted by the government or payers. It is a labor-intensive, costly and time-consuming process.

EHR links specific data elements together. If a patient comes in with an acute myocardial infarction (AMI), for example, P4P reporting would require information on the type of intervention administered; the time when the medication, procedures or tests were given; and the clinical impact of the treatment. The initial results — vital signs, electrocardiogram (EKG), lab tests — might be available in the ER, but P4P requires more complete results that might not be ready for several hours or even days. And those results might reside in separate computer systems, on a lab report or even in the chart at the patient’s bedside. A P4P system needs to capture information about what's happening across the whole spectrum of care, not just in the ER or the doctor's office.

The ultimate goal is to create a system that effects changes in care delivery — that gives providers timely and accurate information that allows them to modify or improve patient care based on having access to what happened to that patient yesterday or last week or last month. Ultimately P4P looks to EHR to deliver the data that allow clinicians to make decisions at the point of care. The clinical information systems used to support the EHR should have the capabilities to enable the care process with continually updated evidenced-based practice mechanisms, patient safety guidelines (i.e., medication interactions), documentation fields that are aligned with performance measures being tracked and the ability to pull concurrent information and data.

Clinical information system vendors are trying to respond, but as yet there is no off-the-shelf solution. Vendors are in the early stages of creating the enabling technology and functionality to support P4P requirements.

Even if an off-the-shelf solution were available, there are other barriers to overcome. Some hospitals are delaying participation because they don’t have the necessary results to be eligible for the bonuses being offered in many programs.When hospitals look at core measures from those programs and how to raise performance, they usually need to face the reality that success means making changes in how people practice.

As these pilot programs evolve and expand, P4P requirements are continually changing, making it difficult for hospitals to keep up. It’s difficult for everyone to get on same page, even with tasks as basic as how to code a specific event.

Requirements also vary by payer. The Centers for Medicare & Medicaid Services requires information on five clinical conditions. California collects clinical measurements but also incorporates a consumer component; patient satisfaction measures. In addition, the state looks at how many actual dollars organizations are investing in information technology. There is a trend toward standardized, nonproprietary measures, but we are not there yet. Requirements are inconsistent for each of the clinical systems currently involved in P4P models.

The key in developing EHR is to devise technology that doesn’t vary if measures change from A to B.

Action Guidelines

Health organizations need to determine their organizational readiness for P4P programs and improve their ability to comply with program requirements. They need to assess their capabilities and build the necessary organizational commitment to the concept. They then need infrastructure, processes and tools to support and drive quality outcomes, compliance, measurement and reporting in a P4P environment. Some of the key success factors are as follows:

• Collaboration. Payers and providers must be able to overcome any historical mistrust. Together they must define measures upon which quality ratings and bonus payments will be based, determine the financial formulas and timelines for reimbursement and potentially change the contracting processes. Only through collaboration will providers overcome their resistance and payers achieve the necessary buy-in and support.
• Continuous and proactive planning. Health organizations need to develop the organizational infrastructure, culture and professional resources to support P4P approaches and compliance with measures. Organizations need mechanisms for continuous improvement (versus meeting static thresholds). They need to plan carefully to ensure that the savings derived from P4P outweigh the administrative and program costs.
• Clinicians involved in program design and implementation. Hospitals and payers need to get the necessary support from physicians and other clinicians whose performance may be impacted by the program. They need an adoption strategy to get buy-in around evidence-based practice.
• Evidence-based guidelines. Health organizations need to establish a culture and process to decrease the variance in care and standardize clinical practices through adoption of evidence-based practices.
• A rigorous follow-up process. Health organizations need to evaluate program performance and track direct and indirect consequences to ensure that changes in quality — not just cost — are being effected. Payers and providers will need to respond to results and guide improvements in performance. They will need to evolve the programs over time to incorporate consumer behavior changes.
• A substantial commitment to clinical information technology. Health organizations must determine how to fund and implement clinical information technology to enable the process of collecting and reporting data on performance. Focusing care delivery on the production of outcomes rather than on just producing services will require developing new care management capabilities. This could include disease registries, electronic information systems capable of producing quality and outcome metrics and longitudinal trending analyses.

Summary

The use of performance measures is definitely growing and, increasingly, performance measures will be publicly reported and will influence consumer behavior. Consumerism, payers’ frustrations with escalating costs and the imperative to improve patient safety will mandate greater monitoring of quality performance, with or without the payment component. So providers need to be prepared, regardless of whether they’re currently involved in a P4P contract. Preparation means the timely creation and deployment of an electronic health infrastructure that facilitates the collection, transmittal and analyses of the performance data that will drive these programs. The ultimate destination is certain: Providers will need to be prepared for an era of greater accountability and performance tracking.