Centers for Medicare & Medicaid Centers for Medicare & Medicaid Services and Services and

Quality-Based PurchasingQuality-Based Purchasing

Kenneth S. Fink, MD, MGA, MPH

Chief Medical OfficerCMS Region X

IOM DefinitionsIOM Definitions

• Quality“The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge”

• Efficiency“In an efficient health care system, resources are used to get the best value for the money spent. The opposite of efficiency is waste, the use of resources without benefit to the patients….”

IOM RecommendationIOM Recommendation

That … the Department of Health and Human Services create an environment that fosters and rewards improvement by:• creating an infrastructure to support

evidence-based practice, • facilitating the use of information

technology, • aligning payment incentives, and • preparing the workforce to better serve

patients in a world of expanding knowledge and rapid change.

CMS Quality VisionCMS Quality Vision

The right care for every person

every time

CMS’ Quality Improvement CMS’ Quality Improvement Roadmap StrategiesRoadmap Strategies

• Work through partnerships• Measure quality and report comparative results

• Utilize pay for performance – improve quality and avoid unnecessary costs

• Encourage adoption of effective health information technology

• Promote innovation and the evidence base for effective use of technology

• Rising costs drive focus to value• Current system rewards quantity, not quality

• Need to align payment structure with improved quality of care

• Facing fee schedule reduction• Payment reform receiving increased attention

CMS Current ContextCMS Current Context

Increasing ExpendituresIncreasing Expenditures

Medicare Expenditures 1966-2004

0

50

100

150

200

250

300

350

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

$ bi

llion

s

Total Expenditures

Physican and ClinicalServices

Examples of Poor Quality Examples of Poor Quality CareCare

for those for those >>6565Medicare National

Mammogram in past 2 years

58 % 68 %

HgbA1c, eye exam and foot exam in past year

57 % 59 %

Pneumococcal vaccine

48 % 56 %

Nosocomial infections

2.8/1000 2.2/1000

From 2005 NHQR

Medicare should care Medicare should care about qualityabout quality

• Increases benefit and reduces harm

• Decreases variation • Improves value• Improves health outcomes

Strategies for Quality Strategies for Quality and Efficiency and Efficiency ImprovementImprovement

• Nonfinancial incentives• Financial incentives• Organizational redesign

– Quality Improvement Organizations

http://www.cms.hhs.gov/

Support for Support for Pay for PerformancePay for Performance

• President– FY 2006 budget

•“The Administration will take further steps to encourage excellence in care by exploring provider payment reforms that link quality to Medicare reimbursement in a cost neutral manner. Such payment reforms should be flexible enough to support innovations in health care delivery.”

– FY 2007 budget•Expansion of P4P initiatives

• Congress– Deficit Reduction Act provisions for hospitals, home health agencies, and a gainsharing demonstration

Additional Support for Additional Support for Pay for PerformancePay for Performance

• MedPAC– “Medicare is ready to implement pay for performance as a national program and that differentiating among providers based on quality is a important first step towards purchasing the best care for beneficiaries and assuring the future of the program.”

• IOM– “New payment incentives must be created to encourage the redesign of structure and processes of care to promote higher value….Its purpose is to align payment incentives to encourage ongoing improvement in a way that will ensure high-quality care for all.”

What does Pay for What does Pay for Performance mean to CMS?Performance mean to CMS?

• Mechanism for promoting better quality, while avoiding unnecessary costs

– Explicit payment incentives to achieve identified quality and efficiency goals

• Measures– Quality, cost, patient experience– Valid and reliable– Evidence based

• Data Infrastructure– Collection– Analysis– Validation– Appeals

• Incentive Methodology– Individual measures or composite– Attainment and improvement– Bonus or differential– Funding source

Pay for Performance Pay for Performance ElementsElements

P4R/P4P ProgramsP4R/P4P Programs

• Hospital Quality Initiative• Home Health Agency Pay for Reporting• Physician Voluntary Reporting Program (PVRP)

• Physician Resource Use• Medicaid

Hospital Quality Alliance Hospital Quality Alliance (HQA)(HQA)

• Public-private collaboration of federal agencies, key hospital and health care organizations, and consumer groups– CMS, AHRQ, AHA, NQF, JCAHO, AMA, AFL-CIO, AARP

• Supports CMS’ implementation of hospital P4R/P4P

• Purpose is to adopt one robust, nationally standardized and prioritized set of measures, reported by every hospital in the country and accepted by all purchasers, overseers, and accreditors

Hospital Quality Hospital Quality InitiativeInitiative

• MMA Section 501(b) – Authorized hospital pay for reporting– Payment differential of 0.4% for FYs 2005-07

– Starter set of 10 measures selected by HQA•AMI, HF, pneumonia, surgical infections

– Public reporting through CMS’ Hospital Compare website

– High participation rate (>98%) for small incentive

Hospital Quality Hospital Quality InitiativeInitiative

• DRA Section 5001(a)– Payment differential of 2% for FYs 2007- – Expanded measure set, based on IOM’s December 2005 Performance Measures Report•Added HCAHPS

• DRA Section 5001(b)– Plan for hospital P4P beginning with FY 2009•Plan must consider: quality and cost measure development and refinement, data infrastructure, payment methodology, and public reporting

Premier Hospital Quality Premier Hospital Quality Incentive DemonstrationIncentive Demonstration

• Involved more than 250 voluntary hospitals• Used 34 quality measures

– AMI, CABG, pneumonia, HF, hip/knee arthroplasty

• Top decile received 2% increase and second decile received 1% increase

• In year 3, those below year 1 ninth decile cut-off received 1% decrease and below tenth decile cut-off received 2% decrease

Premier Hospital Quality Premier Hospital Quality Incentive DemonstrationIncentive Demonstration

CMS/Premier HQID Project Participants Composite Quality Score:

Trend of Quarterly Median (5th Decile) by Clinical Focus AreaOctober 1, 2003 - December 31, 2005 (Year 1 Final Data, Year 2 and Q4-05 Preliminary)

70.0

0%

64.1

0%

73.1

3%

68.1

1%

86.8

7%

93.6

5%

82.5

1%

77.8

8%

92.0

7%93.4

6% 94.8

4%

82.7

2%

81.5

7%

93.9

8%

95.0

7%

96.0

7%

84.8

1%

82.9

8%

95.3

7%

95.7

7%

96.8

5%

86.4

3%

84.3

8%

95.8

0%

95.9

8%

96.7

7%

88.5

4%

86.7

3%

96.0

5%

85.1

3%

89.8

8%

85.1

4%85

.92%

90.0

6%

89.0

%

73.1

%

78.3

%

91.5

%

88.9

% 90.5

%

76.2

%

80.0

%

92.6

%

90.0

%93.5

0%

60%

65%

70%

75%

80%

85%

90%

95%

100%

AMI CABG Pneumonia Heart Failure Hip and Knee

Clinical Focus Area

Co

mp

osi

te Q

ual

ity

Sco

re

Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05

Home Health Agency P4RHome Health Agency P4R

• Authorized in DRA Section 5201• Begins in 2007• 2% payment differential for P4R• Public reporting on Home Health Compare website

• MedPAC Report to Congress on home health P4P by June 1, 2007

Physician Fee SchedulePhysician Fee Schedule

• In 1992, the Medicare Fee Schedule took effect

• As part of the 1997 BBA, Congress created the Sustainable Growth Rate (SGR)

• Since 2002 the fee schedule would have resulted in negative annual updates without Congressional intervention

• Facing a 5% reduction for 2007

Physician Voluntary Physician Voluntary Reporting Program (PVRP)Reporting Program (PVRP)

• An effort to begin to align payment with quality

• Involves submission of new codes on claims to reflect quality – Alternatively can participate in DOQ-IT

• Starter set of 16 measures to be expanded to include nearly all specialties

• Registrants receive confidential reports

PVRP Initial MeasuresPVRP Initial Measures

• Aspirin at arrival for acute myocardial infarction

• Beta-blockers at arrival for acute myocardial infarction

• Hemoglobin A1c control for diabetes

• Low-density lipoprotein control for diabetes

• High blood pressure control for diabetes

• ACE inhibitors or ARBs for left ventricular systolic dysfunction

• Beta-blockers for history of acute myocardial infarction

• Falls assessment for elderly

• Antidepressants for depression

• Dialysis dose for ESRD• Hematocrit level for

ESRD• Arteriovenous fistula

for dialysis• Antibiotic prophylaxis

for surgery• Thromboembolism

prophylaxis for surgery• Internal mammary artery

use for CABG• Pre-operative beta-

blocker for isolated CABG

• Beta-blocker therapy for patient with prior myocardial infarction– G8033 Patient taking a beta-blocker – G8034 Patient not taking a beta-blocker

– G8035 Patient not eligible for beta-blocker

Example: G-codesExample: G-codes

• Beta-blocker therapy for patient with prior myocardial infarction– 4006F Patient taking a beta-blocker – 4006F-1P Patient not taking a beta-blocker for medical reasons

– 4006F-2P Patient not taking a beta-blocker for patient reasons

– 4006F-3P Patient not taking a beta-blocker for system reasons

Example: CPT-2 codesExample: CPT-2 codes

Steps toward P4PSteps toward P4P

• Pay for reporting was hoped to begin in 2008 with pay for performance likely to follow

• Methodologies being developed– Calculating performance rates– Determining payments

• Ongoing issues– Practice or physician– Process or outcome– Accountability– Risk adjustment

MedicaidMedicaid

• P4P is allowable and voluntary for state Medicaid programs

• At least 12 states have implemented P4P initiatives

• CMS will provide technical assistance to states

• CMS encourages states to evaluate their P4P programs

http://www.cms.hhs.gov/

Improving EfficiencyImproving Efficiency

• MedPAC recommends:– "CMS should use Medicare claims data to measure fee-for-service physicians' resource use and share results with physicians confidentially to educate them about how they compare with aggregated peer performance."

• CMS created the Physician Resource Use Workgroup

Efficiency EffortsEfficiency Efforts

• Prospective Payment System• Physician Resource Use Reports• Episode Grouper software evaluation

Prospective Payment Prospective Payment SystemSystem

• Pays a predetermined, fixed amount– acute inpatient hospitals – home health agencies– hospice– hospital outpatient – inpatient psychiatric facilities – inpatient rehabilitation facilities– long-term care hospitals– skilled nursing facilities

• Excludes physician services

Cost of CareCost of Care Measurement Goals Measurement Goals

• To develop meaningful, actionable, and fair cost of care measures of actual to expected physician resource use

• To link cost of care measures to quality of care measures for a comprehensive assessment of physician performance

Resource Use ReportsResource Use Reports

• Used for highly utilized imaging services– Phase I: Echocardiograms for Heart

Failure– Phase II: MRs/CTs for Neck Pain

• Lessons learned• Limitations to use of claims data• Costs of reports likely to outweigh

benefits• Could be used to identify outliers

Episode Grouper Episode Grouper EvaluationEvaluation

• To understand episode grouper technology and its potential uses

• To compare and contrast the characteristics of selected, commercially-available episode groupers

• To determine which grouper, if any, best defines comparable episodes of care at the individual physician level for the Medicare population

Episode Grouper Episode Grouper EvaluationEvaluation

• Phase I: Data Configuration Issues– Focusing on six conditions

1.Diabetes 4. Stroke2.Heart failure 5. Prostate cancer3.COPD 6. Hip fracture

• Phase II: Risk Adjustment• Phase III: Groupers as Physician

Resource Use Reporting Tools

Some P4P Some P4P DemonstrationsDemonstrations

• Physician Group Practice• Medicare Hospital Gainsharing • Medicare Care Management Performance

• Medicare Health Care Quality

Physician Group Physician Group PracticePractice

• Authorized by BIPA 2000• 3 year project to incentivize care coordination for chronically ill and high cost beneficiaries in an efficient manner

• Groups share in financial savings of actual spending compared to target spending

• Addresses DM, HF, CAD, and prevention• Ten group practices representing 5,000 physicians and 200,000 Medicare beneficiaries– Everett Clinic

Medicare Hospital Medicare Hospital GainsharingGainsharing

• Authorized by DRA 2005• Allows gainsharing between hospitals and physicians

• Aligns incentives between hospitals and physicians to improve quality and efficiency

• 3 year project involving 6 sites, 2 of which are rural

Medicare Care Management Medicare Care Management PerformancePerformance

• Authorized by MMA 2003• P4P pilot with physicians to promote adoption and use of health information technology to improve quality

• Bonus payments made for meeting performance standards in DM, HF, CAD, and prevention

• 3 year project targeting small and medium sized practices participating in DOQ-IT and located in CA, AR, MA, and UT

Medicare Health Care Medicare Health Care QualityQuality

• Authorized by MMA 2003• 5 year project testing major changes to improve quality and efficiency across a health care system

• Also addresses patient safety, effectiveness, patient-centeredness, timeliness, and equity

• Participating entities include physician groups, integrated delivery systems, and regional health care consortia

SummarySummary

• CMS is committed to improving quality and efficiency

• CMS’ roadmap for improving quality and efficiency includes – Moving forward through partnerships

– Using financial incentives– Reporting measures publicly– Encouraging adoption of health information technology

“The entire concept of pay for performance is offensive. We shouldn’t ever expect anyone to get paid more for

doing what they were . . . paid to do,” he said. Medicare “must demand the highest quality and no less.” Quality should be expected “from each and every provider. And my solution would be to the provider who can’t provide quality care, to defrock

‘em.”

Representative Stark as reported in CQ HealthBeat

ResourcesResources

• Kenny Fink– kenneth.fink@cms.hhs.gov– 206-615-2390

• http://www.cms.hhs.gov/QualityInitiativesGenInfo/

• http://www.cms.hhs.gov/DemoProjectsEvalRpts/MD/list.asp

• http://www.cms.hhs.gov/QualityImprovementOrgs/• http://www.cms.hhs.gov/MedicaidSCHIPQualPrac/