Value Based Purchasing

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Value Based Purchasing

• Division of Quality, Evaluation,
• and Health Outcomes
• CMS

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• Price and Quality Transparency.
• The President seeks the commitment of medical
  providers, insurance companies, and business
  leaders to help consumers obtain better
  information on health care prices and quality.
  The Administration will leverage Federal
  resources and work with the private sector to
  develop meaningful measures for health care
  quality and to emphasize the importance of
  all-inclusive price information.
• Budget of the United States, FY07

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Driving Forces

• Secretary Leavitts 500 Day Plan/250 Day Update
• Vision
• Wellness and prevention are sought as rigorously
  as treatment.
• Information about the quality and price of health
  care is widely available and Americans have a
  sense of ownership about choices for health care
  and their health.
• Inequalities in health care are eliminated.
• Medicare and Medicaid are modernized to provide
  high-quality health care in a financially
  sustainable way.
• Medicare and Medicaid beneficiaries are
  cost-conscious consumers.
• Medicare and Medicaid are leaders in the use of
  advanced technologies and performance measures.

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CMS Quality Council Forums
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CMS Quality Improvement Roadmap Released in
August 2005

• Vision The right care for every person every
  time

• Aims Make care safe, effective, efficient,
  patient-centered, timely and equitable

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Medicaid/SCHIP Quality Strategy

• Builds upon the CMS Quality Roadmap and
  structured to recognize the unique relationship
  between the Federal Government and States.
• The pillars of the Medicaid/SCHIP framework are
• Evidenced-Based Care and Quality Measurement
• Supporting Performance based Payment
• Health Information Technology
• Partnerships
• Information Dissemination and Technical
  Assistance

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Evidenced Based Care and Quality Measurement

• Encourage development and utilization of
  validated and tested measures for assessing the
  performance of health care providers and plans

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Linking Quality and Cost Pay for Performance
and Efficiency

• Efficiency Is One of the Institute of Medicine's
  Key Dimensions of Quality
• Safety
• Effectiveness
• Patient-Centeredness
• Timeliness
• Efficiency absence of waste, overuse, misuse,
  and errors
• Equity
• Institute of Medicine Crossing the Quality
  Chasm
• A New Health System for the 21st Century, March,
  2001.

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What Is Efficiency?

• Efficiency When a given level of output is
  achieved at the lowest total cost
• For health policy purposes, efficiency is
  attained when a given level of quality of care
  is achieved at the lowest total cost

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Overarching Principles Medicaid P4P programs
should be

• Data driven
• Beneficiary-centered
• Transparent
• Developed through partnerships
• Administratively flexible

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IOM Rewarding Provider Performance

• Payment incentives to reward quality can serve
  as a powerful stimulus to drive institutional and
  provider behavior toward better quality
• Incentives alone would be insufficient without
  certain conditions such as public reporting,
  beneficiary incentives, and education of boards
  of directors.

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Quality Components P4P programs should be built
on

• Evidence-based guidelines
• Consistent measures of access, quality, costs,
  and satisfaction
• Coordinated care programs
• Health information technology

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Incentive Structure P4P incentives
consideration

• Equitable and fair to program participants
  including the beneficiary
• Timely
• Sufficient to motivate improvement
• Flexible enough to provide payment for innovative
  care processes
• Structured to avoid unintended consequences

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Considerations for States

• What are the States goals of the pay for
  performance strategy?
• What is the overall strategy to achieve the
  goal(s) listed?
• What is the delivery system and population for
  which the pay for performance program will be
  implemented (e.g. fee-for-service, managed care,
  disabled and elderly, children, etc.)?
• What performance measure sets, data sources and
  abstraction methodologies will serve as the basis
  of the pay for performance strategy?
• Who will receive the incentive payments
  providers or beneficiaries? If provider, specify
  the provider type, i.e. physicians, managed care
  organization?

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Considerations for States

• Can efforts be aligning with other standardized
  quality reporting efforts reduces the burden on
  providers in providing disparate information and
  allows States to join established programs and
  processes. Identify current purchaser coalitions
  currently in the State, such as Bridges to
  Excellence that the State may leverage in
  development of its plan. Describe the nature of
  the coalition statewide, regional, particular
  provider groups or other?
• Does the State anticipate cost increases in the
  first year of project implementation? If so, to
  what will the costs be attributed? If no savings
  are anticipated in the first year, how will
  incentives be financed?

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Consideration for States

• States should consider establishing the link
  between quality and resource usage. Efficiency
  measures are useful to measure cost savings in
  the implementation of pay for performance
  programs. If the goal of the pay for performance
  strategy is to achieve cost savings, indicate the
  efficiency measures the State has investigated or
  proposes to use. Identify how savings will be
  quantified in subsequent years.
• Will the State publicly report the quality
  results and payment incentives that were made
  during the year? If so, what vehicle will be used
  for reporting?
• Identify how unintended consequences of pay for
  performance will be monitored and addressed.

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Also needed to make pay for performance more
effective is coordination among payers in using
measures, Rosenthal said. "If only a few of the
many payers that a provider contracts with are
paying for performance, or if each payer focuses
on a different measure set, the effects of pay
for performance may be diluted. testimony
before the Employer-Employee Relations
Subcommittee of the House Committee on Education
and the Workforce.
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Medicaid/SCHIP State Health Official Letter

• Provides a brief description of
  pay-for-performance as a strategy to stimulate
  improvements in the quality of care and more
  appropriately align resources.
• Indicates the authority under which States may
  implement pay-for-performance strategies.
• Answers questions regarding financial
  considerations, including the Federal Financial
  Participation, budget neutrality and cost
  effectiveness issues when implementing
  pay-for-performance strategies.
• Provides a chart describing strategies several
  States have implemented to provide performance
  incentives to providers and managed care
  organizations including the measures and
  incentive methodologies used.
• Informs States of potential opportunities to
  partner with CMS in a nursing home
  pay-for-performance demonstration.
• Informs of the availability of technical
  assistance to States interested in pursuing
  pay-for-performance purchasing mechanisms.

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Obtaining Approval for P4P

• Each State exercises great flexibility in the
  operation of their Medicaid program therefore
  each program is different.
• While there are general regulatory consideration,
  each State will have to work with CMS to
  determine if their proposed payment plans are in
  compliance with the law.
• It is much better to do this at the beginning of
  the program than to set up expectations in the
  State that may have to be modified later.

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Considerations in P4P

• Most managed care incentives are accomplished
  through the contractual process with the MCO
• In managed care, contracts with incentive
  arrangements may not provide for payments in
  excess of 105 of the approved capitation
  payments attributable to the enrollees or
  services covered by the incentive arrangement,
  since such total payments would not be considered
  actuarially sound.

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Considerations in P4P

• For states that pay a PCCM on a fee-for-service
  basis, incentive payments are permitted as an
  enhancement to the PCCMs case management fee, if
  certain conditions are met.
• Incentive payments to the PCCM will not exceed 5
  of the total FFS payments for those services
  provided or authorized by the PCCM for the period
  covered.
• Incentives will be based upon specific activities
  and targets.
• Incentives will be based upon a fixed period of
  time.
• Incentives will not be renewed automatically.
• Incentives will be made available to both public
  and private PCCMs.
• Incentives will not be conditioned on
  intergovernmental transfer agreements.

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Considerations in P4P

• Value based purchasing proposals in
  fee-for-service must be requested in writing via
  the State Plan (pre-print available for managed
  care and PCCMs not requested under section 1115
  or section 1915(b) waiver authority).
• Federal officials will review the proposed
  payment structures in the State Plan to assure
  that the proposed payments are consistent with
  economy and efficiency and the upper payment
  limits established for those services.
• Fee-for-Service payment proposals should be
  linked to a service

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Considerations of P4P for Federally Qualified
Health Centers

• 3 items must be considered
• Any alternative payment methodology under PPS
  must be agreed to by the State and each
  individual FQHC
• the methodology must result in a payment that is
  at least equal to what is entitled under PPS.
• the methodology must be described in the approved
  State plan.

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Incentives Currently Used in the Industry

• Public reporting of quality information
• Performance based rate adjustments
• Performance based bonuses
• Competitive payment schedule
• Tiered payment levels
• Performance based fee schedules
• Performance based payment withholds
• Quality Grants
• Autoassignments

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• The Right Care for Every
• Person Every Time