Towards a Value-based Model:Towards a Value-based Model:Pay for Pay for

Reporting/Performance Reporting/Performance Initiatives in the Medicare Initiatives in the Medicare

ProgramProgram

Barry M. Straube, M.D.Centers for Medicare & Medicaid Services

(CMS)Pay for Performance Audio Conference: Pay for Performance Audio Conference:

Overview of PFP Initiatives in the Overview of PFP Initiatives in the Marketplace TodayMarketplace Today

June 7, 2007June 7, 2007

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The Healthcare Quality The Healthcare Quality ChallengeChallenge

We spend more per capita on healthcare than We spend more per capita on healthcare than any other country in the worldany other country in the world

In spite of those expenditures, US Healthcare In spite of those expenditures, US Healthcare quality is often inferior to other nations and quality is often inferior to other nations and often doesn’t meet expected evidence-based often doesn’t meet expected evidence-based guidelinesguidelines

There are significant variations in quality and There are significant variations in quality and costs across the nationcosts across the nation

CMS is responsible for the healthcare of a CMS is responsible for the healthcare of a growing number of personsgrowing number of persons

CMS, in partnership and collaboration with CMS, in partnership and collaboration with other healthcare leaders, must demonstrate other healthcare leaders, must demonstrate leadership in addressing these issuesleadership in addressing these issues

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CMS as a Public Health CMS as a Public Health AgencyAgency

Using CMS influence and financial leverage, in Using CMS influence and financial leverage, in partnership with other healthcare stakeholders, partnership with other healthcare stakeholders, to transform American healthcare systemto transform American healthcare system

Focusing on not just Medicare & Medicaid, but Focusing on not just Medicare & Medicaid, but also Commercial, uninsured, etc.also Commercial, uninsured, etc.

Quality, Value, Efficiency, Cost-effectivenessQuality, Value, Efficiency, Cost-effectiveness Person-centerednessPerson-centeredness Assisting patients and providers in receiving Assisting patients and providers in receiving

evidence-based, technologically-advanced care evidence-based, technologically-advanced care while reducing avoidable complications & while reducing avoidable complications & unnecessary costsunnecessary costs

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Congressional & Employer Congressional & Employer InterestsInterests Many opportunities for improving the Many opportunities for improving the

quality of healthcare services, outcomes quality of healthcare services, outcomes and efficiencyand efficiency

Increasing reimbursement for healthcare Increasing reimbursement for healthcare services leads to:services leads to: No uniform or widespread improvement in No uniform or widespread improvement in

qualityquality Increased utilization of some servicesIncreased utilization of some services Net increase in overall healthcare expendituresNet increase in overall healthcare expenditures

Congress & employers looking to CMS and Congress & employers looking to CMS and healthcare providers to demonstrate ability healthcare providers to demonstrate ability to improve quality, avoid unnecessary to improve quality, avoid unnecessary complications and costscomplications and costs Overall Medicare payment reform linkedOverall Medicare payment reform linked

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CMS Quality RoadmapCMS Quality Roadmap

VISION: VISION: The right care for The right care for every person every timeevery person every time Make care:Make care:

Safe Safe Effective Effective Efficient Efficient Patient-centered Patient-centered TimelyTimelyEquitableEquitable

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CMS Quality Roadmap: CMS Quality Roadmap: StrategiesStrategies

1.1. Work through partnerships to achieve Work through partnerships to achieve specific quality goalsspecific quality goals

2.2. Publish quality measurements and Publish quality measurements and information as a basis for supporting information as a basis for supporting more effective quality improvement more effective quality improvement effortsefforts

3.3. Pay in a way that expresses our Pay in a way that expresses our commitment to quality, and that helps commitment to quality, and that helps providers and patients to take steps to providers and patients to take steps to improve health and avoid unnecessary improve health and avoid unnecessary costscosts

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CMS Quality Roadmap: CMS Quality Roadmap: Strategies for QIStrategies for QI

4.4. Assist practitioners in making care Assist practitioners in making care more effective and less costly, more effective and less costly, especially by promoting the adoption of especially by promoting the adoption of HITHIT

5.5. Bring effective new treatments to Bring effective new treatments to patients more rapidly and help develop patients more rapidly and help develop better evidence so that doctors and better evidence so that doctors and patients can use medical technologies patients can use medical technologies and treatments more effectively, and treatments more effectively, improve quality and avoid unnecessary improve quality and avoid unnecessary complications and costscomplications and costs

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CMS Quality & P4P CMS Quality & P4P InitiativesInitiatives HospitalsHospitals

Nursing HomesNursing Homes Home Health AgenciesHome Health Agencies

Dialysis FacilitiesDialysis FacilitiesPhysician OfficesPhysician Offices

More to come…….More to come…….Public reporting not new on CMS Public reporting not new on CMS Compare website for all of above, will Compare website for all of above, will expandexpandCross-setting quality & efficiency focus Cross-setting quality & efficiency focus (care across the continuum) increasingly (care across the continuum) increasingly importantimportant

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CMS P4P Initiatives (MMA & CMS P4P Initiatives (MMA & Before)Before)

Hospital Quality Initiative (MMA section Hospital Quality Initiative (MMA section 501b)501b)

Premier Hospital Quality Incentive DemoPremier Hospital Quality Incentive Demo Physician Group Practice Demo (BIPA 2000)Physician Group Practice Demo (BIPA 2000) Medicare Care Management Performance Medicare Care Management Performance

Demo (MMA section 649)Demo (MMA section 649) Medicare Health Care Quality Demo (MMA Medicare Health Care Quality Demo (MMA

section 646)section 646) Chronic Care Improvement Program (MMA Chronic Care Improvement Program (MMA

section 721)section 721)

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CMS P4P Initiatives (MMA & CMS P4P Initiatives (MMA & Before)Before)

ESRD Disease Management Demo (MMA ESRD Disease Management Demo (MMA section 623)section 623)

Disease Management Demo for Severely Disease Management Demo for Severely Chronically Ill Medicare Benficiaries Chronically Ill Medicare Benficiaries (BIPA 2000)(BIPA 2000)

Disease Management Demo for Disease Management Demo for Chronically Ill Dual-Eligible BeneficiariesChronically Ill Dual-Eligible Beneficiaries

Care Management for High-Cost Care Management for High-Cost BeneficiariesBeneficiaries

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CMS & Quality AlliancesCMS & Quality Alliances Public-private partnerships seem to be Public-private partnerships seem to be

working, albeit with an urgency for working, albeit with an urgency for faster progressfaster progress

Broad National Quality AlliancesBroad National Quality Alliances Hospital Quality Alliance (HQA)Hospital Quality Alliance (HQA) Ambulatory Care Quality Alliance (AQA)Ambulatory Care Quality Alliance (AQA) Pharmacy, ESRD, Cancer Quality Alliances, Pharmacy, ESRD, Cancer Quality Alliances,

etc., with more emergingetc., with more emerging Consensus-driven quality & efficiency Consensus-driven quality & efficiency

measures identification, prioritization, measures identification, prioritization, development, endorsement, and development, endorsement, and implementationimplementation

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Healthcare Transparency Healthcare Transparency InitiativeInitiative

Administration’s Transparency InitiativeAdministration’s Transparency Initiative Making available quality and price/cost Making available quality and price/cost

informationinformation Allowing consumers, employers, payers to Allowing consumers, employers, payers to

choose the best value healthcarechoose the best value healthcare Presidential Executive OrderPresidential Executive Order The Secretary’s Initiative Four The Secretary’s Initiative Four

CornerstonesCornerstones Information on quality Information on quality Information on cost/priceInformation on cost/price Promote interoperable HIT systemsPromote interoperable HIT systems Incentives for higher-quality, efficient careIncentives for higher-quality, efficient care

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Value-Driven Healthcare Value-Driven Healthcare InitiativeInitiative

Community LeadersCommunity Leaders Early stage community collaboration efforts Early stage community collaboration efforts

in healthcare qualityin healthcare quality Recognized by the Secretary of HHSRecognized by the Secretary of HHS

Chartered Value Exchanges (CVEs)Chartered Value Exchanges (CVEs) Local collaboratives focused on quality Local collaboratives focused on quality

improvement and use of aggregated data improvement and use of aggregated data with public reportingwith public reporting

Designated by the Secretary HHSDesignated by the Secretary HHS Learning Networks run by AHRQLearning Networks run by AHRQ Medicare data access qualifications by CMSMedicare data access qualifications by CMS

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Value-Driven Healthcare Value-Driven Healthcare InitiativeInitiative

Better Quality Information for Medicare Better Quality Information for Medicare Beneficiaries: BQI Pilots via AQABeneficiaries: BQI Pilots via AQA WI, MN, IN, MA, AZ, CAWI, MN, IN, MA, AZ, CA

Testing of data aggregation and public Testing of data aggregation and public reporting of commercial, Medicare, & reporting of commercial, Medicare, & Medicaid quality dataMedicaid quality data

Pilot site use of quality data for:Pilot site use of quality data for: Quality improvementQuality improvement Consumer & employer choice of providersConsumer & employer choice of providers Pay-for-Performance and other incentives Pay-for-Performance and other incentives

for higher quality and efficiency for higher quality and efficiency

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Deficit Reduction Act of Deficit Reduction Act of 20052005

Medicare Part AMedicare Part A Hospital Value-based purchasing planHospital Value-based purchasing plan Demonstration projects in gainsharingDemonstration projects in gainsharing Post-acute care payment reform demonstration Post-acute care payment reform demonstration

projectproject Hospital quality reporting: measures set expandedHospital quality reporting: measures set expanded Hospital-acquired infections: Non-payment for 2 Hospital-acquired infections: Non-payment for 2

conditionsconditions Medicare Part A and Part BMedicare Part A and Part B

Home Health Agency quality reportingHome Health Agency quality reporting Prelude to wider P4P in Federal programs via statute?Prelude to wider P4P in Federal programs via statute?

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Hospital Value-Based Hospital Value-Based PurchasingPurchasing

Assumption of implementation in FY 2009W Will require additional statutory authority

CMS must consider: Measures Data Infrastructure and Validation Incentive Structure Public Reporting

Must consult relevant stakeholders and consider experience with relevant P4P demonstrations and private-sector programs

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Hospital Value-Based Hospital Value-Based PurchasingPurchasing

Improve clinical quality Address under-use, over-use, and misuse Encourage patient-centered care Reduce adverse events and improve patient

safety

Avoid unnecessary costs in care

Stimulate investments in effective information technology and the re-engineering of systems

Make performance results transparent to and useable by public and other stakeholders

Avoid creating additional disparities and work to reduce existing disparities

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Tax Relief & Healthcare Act Tax Relief & Healthcare Act of 2006of 2006

Physician Quality Reporting Initiative (PQRI)Physician Quality Reporting Initiative (PQRI) Physician Voluntary Reporting Program (PVRP) Physician Voluntary Reporting Program (PVRP)

showed again that voluntary reporting doesn’t workshowed again that voluntary reporting doesn’t work Establishes a 1.5% bonus payment for physician Establishes a 1.5% bonus payment for physician

office submission of quality measures between July office submission of quality measures between July 1, 2007 and December 31, 20071, 2007 and December 31, 2007

Will use PVRP measures initially, but CMS must Will use PVRP measures initially, but CMS must develop an expanded group of consensus-based develop an expanded group of consensus-based measures via NQF or AQA or similar groupsmeasures via NQF or AQA or similar groups By August 15, 2007: Publish proposed measures in By August 15, 2007: Publish proposed measures in

FRFR By November 15, 2007: Publish final list of measuresBy November 15, 2007: Publish final list of measures

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Tax Relief & Healthcare Act Tax Relief & Healthcare Act of 2006of 2006

2008 measures to be at least 2-3 per specialty2008 measures to be at least 2-3 per specialty 2008 measures to include 2+ structural 2008 measures to include 2+ structural

measuresmeasures Use of electronic health records (EHRs), for e.g.Use of electronic health records (EHRs), for e.g. Use of electronic prescribing, for e.g.Use of electronic prescribing, for e.g.

Will allow for measures reported in registries: Will allow for measures reported in registries: STS, for e.g.STS, for e.g.

Public comment in 2008 Physician Fee Public comment in 2008 Physician Fee Schedule Proposed RuleSchedule Proposed Rule

Sets stage for further Congressional action in Sets stage for further Congressional action in 2008 payment structure2008 payment structure

For more information: www.cms.hhs.gov/PQRIFor more information: www.cms.hhs.gov/PQRI

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Components of Components of Hospital Quality Hospital Quality

InitiativeInitiative National Voluntary Hospital Reporting National Voluntary Hospital Reporting

Initiative (NVHRI) public-private initiativeInitiative (NVHRI) public-private initiative Federation of American HospitalsFederation of American Hospitals AHAAHA AAMCAAMC CMS , JCAHO, othersCMS , JCAHO, others

Hospital Quality AllianceHospital Quality Alliance Medicare Modernization Act of 2003: Medicare Modernization Act of 2003:

Section 501b – Financial incentive of 0.4%Section 501b – Financial incentive of 0.4%

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Hospital Quality Hospital Quality InitiativeInitiative

““Voluntary” participation went from 10% Voluntary” participation went from 10% of hospitals reporting some of 10 of hospitals reporting some of 10 measures to over 95%measures to over 95%

Incentive increased from 0.4% to 2% of Incentive increased from 0.4% to 2% of APU under DRAAPU under DRA

Now 21 hospital quality measures Now 21 hospital quality measures required to qualify for Annual Payment required to qualify for Annual Payment UpdateUpdate

Current year 95% of hospitals qualifiedCurrent year 95% of hospitals qualified Pay-for-Reporting worksPay-for-Reporting works

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Premier Hospital Quality Premier Hospital Quality DemonstrationDemonstration

260 participating hospitals260 participating hospitals Wide variation in demographics, Wide variation in demographics,

fundingfunding 34 Quality Metrics34 Quality Metrics

Acute myocardial infarction (9)Acute myocardial infarction (9) Coronary artery bypass graft (8)Coronary artery bypass graft (8) Heart failure (4)Heart failure (4) Community acquired pneumonia (7)Community acquired pneumonia (7) Hip and knee replacement (6)Hip and knee replacement (6)

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Premier DemonstrationPremier Demonstration Hospital scoresHospital scores

““Rolling up” individual measures into one Rolling up” individual measures into one score for each disease categoryscore for each disease category

Each disease category will be categorized by Each disease category will be categorized by hospital scores by decilehospital scores by decile

Public reporting of all data will be Public reporting of all data will be availableavailable

Financial awardsFinancial awards Hospitals in top 20% will be given bonuses: Hospitals in top 20% will be given bonuses:

2% for top decile, 1% for second decile2% for top decile, 1% for second decile Top 50% recognized on CMS websiteTop 50% recognized on CMS website

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Premier DemonstrationPremier Demonstration Improvement over baselineImprovement over baseline

Hospitals that do not improve over Hospitals that do not improve over demonstration baseline will have adjusted demonstration baseline will have adjusted paymentspayments

Demonstration baseline cut-off will be at Demonstration baseline cut-off will be at level of the 9level of the 9thth and 10 and 10thth deciles of base deciles of base yearyear

Hospitals below baseline 9Hospitals below baseline 9thth decile will decile will have 1% reduction in DRG reimbursementhave 1% reduction in DRG reimbursement

Hospitals below baseline 10Hospitals below baseline 10thth decile will decile will have 2% reduction in DRG reimbursementhave 2% reduction in DRG reimbursement

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Premier Hospital Demo: Premier Hospital Demo: ResultsResults

$8.85 million paid in first year$8.85 million paid in first year AMI – $1.756 million to 49 hospitalsAMI – $1.756 million to 49 hospitals CHF – $1.818 million to 57 hospitalsCHF – $1.818 million to 57 hospitals Pneumonia – $1.139 million to 52 hospitalsPneumonia – $1.139 million to 52 hospitals CABG – $2.078 million to 27 hospitalsCABG – $2.078 million to 27 hospitals Hip & Knee Replacement -$2.061 million to 43 hospitalsHip & Knee Replacement -$2.061 million to 43 hospitals

49 out of 260 participating hospitals received 49 out of 260 participating hospitals received bonusesbonuses

39 out of 260 have < 100 beds, several with awards39 out of 260 have < 100 beds, several with awards Awards received by all hospital typesAwards received by all hospital types All five clinical quality areas demonstrably All five clinical quality areas demonstrably

improvedimproved

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0

10

20

30

40

50

60

70

80

90

100

AMI CHF Pneumo CABG Hip/Knee

BaselineEnd Year 1End Year 2

Premier Hospital ResultsPremier Hospital Results

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Premier Hospital Demo:Premier Hospital Demo:The Business Case for P4PThe Business Case for P4P

Hospitals achieving >75% percentile Hospitals achieving >75% percentile quality scoresquality scores Fewer complicationsFewer complications Fewer readmissionsFewer readmissions Significantly lower hospital costsSignificantly lower hospital costs Significantly shorter length of staySignificantly shorter length of stay

For coronary artery bypass graft patientsFor coronary artery bypass graft patients Significantly lower mortality ratesSignificantly lower mortality rates

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Contact InformationContact Information

Barry M. Straube, M.D.Barry M. Straube, M.D.CMS Chief Medical Officer &CMS Chief Medical Officer &

Director, Office of Clinical Standards & Director, Office of Clinical Standards & QualityQuality

Centers for Medicare & Medicaid ServicesCenters for Medicare & Medicaid Services7500 Security Boulevard7500 Security BoulevardBaltimore, MD 21244Baltimore, MD 21244

Email: Barry.Straube@cms.hhs.govEmail: Barry.Straube@cms.hhs.govPhone: (410) 786-6841Phone: (410) 786-6841