California Pay for Performance: Understanding the Impact of Provider Incentives for Quality

Slide Presentation from the AHRQ 2008 Annual Conference

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On September 9, 2008, Tom Williams made this presentation at the 2008 Annual Conference. Select to access the PowerPoint® presentation (575 KB).

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Slide 1

California Pay for Performance: Understanding the Impact of Provider Incentives for Quality

Tom Williams
Executive Director
Integrated Healthcare Association (IHA)

AHRQ Annual Conference
September 9, 2008

Slide 2

IHA Sponsored Pay for Performance (P4P) Program

The goal: To create a compelling set of incentives that will drive breakthrough improvements in clinical quality and the patient experience through:

• Common set of measures.
• A public scorecard.
• Health plan payments.

Slide 3

Plans and Physician Groups—Who's Playing?

Health Plans:

• Aetna.
  • Blue Cross.
  • Blue Shield.
  • Western Health Advantage.
• Medical Group and Individual Practice Associations (IPAs):
  • 230 groups.
  • 35,000 physicians.
• CIGNA.
• Health Net of CA.
• Kaiser.*
• PacifiCare/United.

• 12 million HMO commercial enrollees

• Note: * Kaiser participates in the public reporting only

Slide 4

Measurement Year Domain Weighting

The table shows the percentages for "2003-6," "2007," "2008," and "2009" for various "Domains."

• Clinical.
  • 2003-6: 40-50%.
  • 2007: 50%.
  • 2008: 40%.
  • 2009: 40%.
• Patient Experience.
  • 2003-6: 30-40%.
  • 2007: 30%.
  • 2008: 25%.
  • 2009: 20%.
• Information Technology (IT) Adoption.
  • 2003-6: 10-20%.
  • 2007: 0.
  • 2008: 0.
  • 2009: 0.
• IT Systemness.
  • 2003-6: 0.
  • 2007: 20%.
  • 2008: 15%.
  • 2009: 20%.
• Coordinated Diabetes Care.
  • 2003-6: 0.
  • 2007: 0.
  • 2008: 20%.
  • 2009: 20%.
• Appropriate Resources Use.
  • 2003-6: 0.
  • 2007: 0.
  • 2008: 0.
  • 2009: Gain-sharing.

Slide 5

Public Reporting

The screen shot shows a page from the State of California's 2007 Health Care Quality Report Card. Opened is the "Medical Group Ratings At-a-Glance" for Alameda County showing groups' ratings for "Meeting National Standards of Care" and "Patients Rate Medical Groups."

Slide 6

Health Plan Payments

• Each health plan determines their own reward methodology and payment amount.
• Most plans pay on relative performance, after meeting thresholds.
  • $38 M paid out in 2004.
  • $54 M paid out in 2005.
  • $55 M paid out in 2006.
  • $65 M paid out in 2007 (about 1.5 to 2% of base pay on average).
• Total paid from 2004 through 2007 (for prior measurement year) is over $210 million.

Slide 7

Physician Group Engagement

• Program Strengths—Physician groups are highly engaged, 74% believe the measures are reasonable, widespread support for increased incentives, and belief the program has increased the focus on quality improvement and IT capabilities.
• Program Weaknesses—Lack of consumer interest in public reporting and concern about the potential for too many measures.
• Overall Rating—65% rated the program as a "4" or "5" (on a 1 to 5 scale) for importance with a mean score of 3.86.

• Source: Program Evaluation by RAND/UC Berkeley.

Slide 8

Health Plan Engagement

• Program Strengths—Increased collaboration, push toward QI, investments in IT, and greater accountability and transparency.
• Program Weaknesses—Improvements viewed as marginal, concerns about "teaching to the test", lack of a positive ROI, and failure of clinical data fed to raise plan Health Plan Employer Data Set (HEDIS) scores.
• Overall Rating—2.5 mean score (1 to 5 pt. scale).

• Source: Program Evaluation by RAND/University of California (UC) Berkeley..

Slide 9

Lessons Learned #1: Measures

• Lesson:
  • Clinical improvement has been incremental.
  • Evidence points to "teaching to the test" vs. systemic improvement.
• P4P Response.
  • Created Coordinated Diabetes Care Domain to focus attention on redesign needed to drive breakthrough improvement.
  • Considering use of multiple chronic care measure domains integrated with care process measures to drive systemic change.

Slide 10

Summary of Performance Results

• Clinical: continued modest improvement on most measures.
  • 5.1 to 12.4 percentage point increases since inception of measure.
• Patient experience: scores remain stable but show no significant system wide improvement.
• IT-Enabled Systemness: most IT measures are improving.
  • Almost two-thirds of physician groups demonstrated some IT capability.
  • Almost one-third of physician groups demonstrated robust care management processes.
• Continued performance improvements but "breakthrough" point not achieved yet.

Slide 11

Clinical Results Baseline—MY 2007

The bar graph presents the results for the "California P4P Program."

• Breast Cancer Screening.
  • Baseline: 65.
  • MY 2006: 70.
  • MY 2007: 69.
• HbA1c Screening.
  • Baseline: 66.
  • MY 2006: 75.
  • MY 2007: 78.
• Chlamydia Screening.
  • Baseline: 31.
  • MY 2006: 38.
  • MY 2007: 43.
• Childhood Immunizations.
  • Baseline: 82.
  • MY 2006: 87.
  • MY 2007: 88.
• Appropriate Medication for Asthma.
  • Baseline: 89.
  • MY 2006: 90.
  • MY 2007: 91.
• Appropriate upper respiratory infection (URI) Treatment.
  • Baseline: 80.
  • MY 2006: 80.
  • MY 2007: 86.

Slide 12

California P4P HEDIS Scores Surpass National Average

The bar graph presents the "Average HEDIS P4P Score: California Plans vs. National Plans," while the line graph presents the rate of improvement.

Bar Graph—(Mean Rate)

• MY 02.
  • CA Rates: 67.6.
  • Ntl Rates: 68.4.
• MY 03.
  • CA Rates: 70.3.
  • Ntl Rates: 71.8.
• MY 04.
  • CA Rates: 72.8.
  • Ntl Rates: 73.5.
• MY 05.
  • CA Rates: 78.3.
  • Ntl Rates: 78.3.
• MY 06.
  • CA Rates: 77.6.
  • Ntl Rates: 77.1.

Line Graph:

• MY 02.
  • CA Rate of Improvement: 0%.
  • Natl Rate of Improvement: 0%.
• MY 03.
  • CA Rate of Improvement: 4%.
  • Natl Rate of Improvement: 5.5%.
• MY 04.
  • CA Rate of Improvement: 8%.
  • Natl Rate of Improvement: 8%.
• MY 05.
  • CA Rate of Improvement: 16%.
  • Natl Rate of Improvement: 14.9%.
• MY 06.
  • CA Rate of Improvement: 15%.
  • Natl Rate of Improvement: 12.9%.

• The national average outperformed the California plans in the baseline year 2002.
• The California plans rate of improvement over the baseline year has increasingly exceeded the rate of improvement of the national average.
• In MY 2006, the California plans outperformed the national average performance.
• Includes commercial plans and excludes Kaiser (Not fully in P4P until 05).

• Note: National Committee for Quality Assurance (NCQA) Study, 2007.

Slide 13

IT Measure 1: Population Management Activities

The bar graph presents the results for the "California P4P Program."

• Patient Registry—(Percentage of Groups).
  • MY 2003: 17%.
  • MY 2004: 27%.
  • MY 2005: 42%.
  • MY 2006: 57%.
  • MY 2007: 53%.
• Actionable Reports.
  • MY 2003: 25%.
  • MY 2004: 40%.
  • MY 2005: 45%.
  • MY 2006: 58%.
  • MY 2007: 57%.
• HEDIS Results.
  • MY 2003: 10%.
  • MY 2004: 37%.
  • MY 2005: 38%.
  • MY 2006: 53%.
  • MY 2007: 53%.

Slide 14

IT Measure 2: Point-of-Care Activities

The bar graph presents the results for the "California P4P Program."

• Electronic Prescribing—(Percentage of Groups).
  • MY 2003: 5%.
  • MY 2004: 9%.
  • MY 2005: 11%.
  • MY 2006: 18%.
  • MY 2007: 18%.
• Electronic Check of Prescription Interaction.
  • MY 2003: 4%.
  • MY 2004: 13%.
  • MY 2005: 16%.
  • MY 2006: 24%.
  • MY 2007: 25%.
• Electronic Retrieval of Lab Results.
  • MY 2003: 17%.
  • MY 2004: 27%.
  • MY 2005: 39%.
  • MY 2006: 41%.
  • MY 2007: 44%.
• Electronic Access of Clinical Notes.
  • MY 2003: 12%.
  • MY 2004: 21%.
  • MY 2005: 31%.
  • MY 2006: 38%.
  • MY 2007: 43%.
• Electronic Retrieval of Patient Reminders.
  • MY 2003: 7%.
  • MY 2004: 12%.
  • MY 2005: 17%.
  • MY 2006: 26%.
  • MY 2007: 39%.
• Accessing Clinical Findings.
  • MY 2003: 0%.
  • MY 2004: 10%.
  • MY 2005: 12%.
  • MY 2006: 18%.
  • MY 2007: 25%.
• Electronic Messaging.
  • MY 2003: 0%.
  • MY 2004: 10%.
  • MY 2005: 27%.
  • MY 2006: 36%.
  • MY 2007: 34%.

Slide 15

Lessons Learned #2: Regional Variability

• Lesson.
  • Wide variation across regions exists; contributes to overall "mediocre" statewide performance.
  • Big gains possible with focused attention on certain regions.
• P4P Response.
  • Pay for and recognize improvement (20% of payment for 2007).
  • More fundamental change in calculus of payment for improvement for 2008/09 using Centers for Medicare & Medicaid Services (CMS) approach.

Slide 16

Health Disparities and California P4P: Clinical Performance Variation

The bar graph presents the "MY 2006 Results by Region."

• Inland Empire: 65.
• Los Angeles: 66.
• Central Coast: 68.
• Central Valley: 70.
• San Diego: 71.
• Orange County: 74.
• Bay Area: 76.
• Sacramento/North: 77.
• Statewide: 70.

• The top performing group was Inland Empire; followed by Central Valley, Orange County, Bay Area, and Statewide; then Los Angeles, San Diego, and Sacramento/North.

Slide 17

Health Disparities and California P4P: A Tale of Two Regions

The bar graph presents the P4P performance score for "Clinical Performance" for "All Groups" in the Inland Empire and the Bay Area.

• Inland Empire: 66.
• Bay Area: 78.

Slide 18

Health Disparities and California P4P: A Tale of Two Regions

• Primary Care Physicians (PCPs)/100K Pop.
  • Inland Empire: 53.
  • Bay Area: 116.
• % Pop. Medi-Cal.
  • Inland Empire: 17%.
  • Bay Area: 12%.
• % Hispanic.
  • Inland Empire: 43%.
  • Bay Area: 21%.
• Per Capita Income.
  • Inland Empire: $ 21,733.
  • Bay Area: $ 39,048.

Slide 19

Health Disparities and California P4P: A Tale of Two Regions

The bar graph presents the P4P performance score for "Clinical Performance" for both "All Groups" and "Top Performing Groups" in the Inland Empire and the Bay Area.

• Inland Empire.
  • All groups: 66.
  • Top Performing Groups: 86.
• Bay Area.
  • All groups: 78.
  • Top Performing Groups: 86.

Slide 20

Are Quality Disparities Correlated with Physician Reimbursement Disparities?

The data and subjective experience suggest:

Physicians groups, located only in geographies with low socioeconomics, receive disproportionately lower reimbursement across their practice, resulting in diminished physician and organizational capacity, reducing both access and quality of healthcare, even in a uniformly, well-insured population.

Slide 21

P4P Payment Incentives

• Fundamental reimbursement disparities appear to be the main culprit; however P4P should at a minimum not increase reimbursement disparities.
• Payment for absolute and relative performance should be balanced with payment for improvement.

Slide 22

Paying for Improvement

Survey Response: What % of total bonus payments by health plans should be allocated to improvement vs. relative performance? (n=200, IHA Stakeholders meeting, 10/4/07).

• The bar graph presents the percentage of responses:
  • 0%: 3%.
  • 10%: 30%.
  • 20-35%: 42%.
  • 35-50%: 15%.
  • 50+: 10%.

Slide 23

Paying for Performance & Improvement

Earning Quality Points Example

• Measure: Pneumococcal Vaccination.
  • Attainment Range.
    • .47: Attainment Threshold.
    • .87: Benchmark.
• Hospital 1 Score.
  • Baseline Score: .21.
  • Performance Score: .70.
  • Attainment Range: 6.
  • Improvement Range: 7.4.
• Hospital 1 Earns:
  • 6 points for attainment.
  • 7 points for improvement.
• Hospital 1 Score: maximum of attainment or improvement = 7 points on this measure.

Slide 24

Lesson Learned #3: Incentives

• Lesson:
  • Incentives may not be properly targeted or structured to achieve desired outcomes.
  • Amount of pay must keep pace with number of measures.
• P4P Response:
  • Increased attention to "pay."
    • Resolved antitrust concerns; formed Payment Committee.
    • Reduce payment variability through methodology recommendations, including minimum payment.
    • Eliminate "black box" by advanced notice of payment methodology.

Slide 25

Lesson Learned #4: Affordability

• Lesson:
  • Diminishing affordability of coverage demands greater attention to cost.
  • Health plan commitment is wavering in the absence of a clear ROI.
• P4P Response:
  • Implement cost efficiency and appropriate resource use measures and gain sharing incentives.
  • Develop business case and ROI.
    • Develop method to measure ROI.
    • Move HEDIS scores to higher levels of performance versus nation.

Slide 26

Cost Efficiency Measurement

• Episodes of care testing.
• Resource use measure development and implementation (e.g., readmission w/in 30 days).
• Hospital P4P under consideration.
• Incentives based upon gain sharing.

Slide 27

California Pay for Performance

For more information:
www.iha.org.
(510) 208-1740.

Integrated Healthcare Association.

Pay for Performance has been supported by major grants from the California Health Care Foundation.

Current as of January 2009

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Internet Citation:

California Pay for Performance: Understanding the Impact of Provider Incentives for Quality. Slide Presentation from the AHRQ 2008 Annual Conference (Text Version). January 2009. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/about/annualmtg08/090908slides/Williams.htm

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