Incentives for Quality

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

Studies suggest that current provider payment systems in the US do not encourage quality improvement in health care. One of the strategies used by employers, business consortia, and public purchasers to improve quality of patient care is rewarding or penalizing through incentives or disincentives. Recently, efforts aimed at improving quality by addressing the provider payment system include "Incentives for Quality" or strategies to reorient payment ot reward efforts.

Purpose of health policy or idea

The United States spends more per capita and a greater percentage of its national income on health care than any other country in the world.  Yet, when comparing U.S. patient-reported experiences with four other English-speaking nations (Australia, Canada, New Zealand, and the United Kingdom), the U.S. performs relatively poorly (K. Davis, C. Schoen, S.C. Schoenbaum, A-M. J. Audet, M.M. Doty, and K. Tenney, Mirror, Mirror on the Wall: Looking at the Quality of American Health Care Through the Patient's Lens, The Commonwealth Fund, January 2004).  Studies suggest that current provider payment systems in the US do not encourage quality improvement in health care (S. Leatherman, D. Berwick, D. Iles, et al, "The Business Case for Quality: Case Studies and an Analysis," Health Affairs 22:17-30).  Goldfarb et al. found that one of the strategies used by employers, business consortia, and public purchasers to improve quality of patient care is rewarding or penalizing performance through incentives or disincentives (N.I. Goldfarb, V. Maio, C.T. Carter, L. Pizzi, and D.B. Nash, How Does Quality Enter into Health Care Purchasing Decisions?, The Commonwealth Fund, Issue Brief #635, May 2003).

Relatively new efforts aimed at improving quality of health care by addressing the provider payment system involve "incentives for quality" (sometimes referred to as "paying for performance") or strategies to reorient payment to reward efforts to improve quality.  The idea is to provide higher reimbursement to providers who provide improved quality in health care delivery.

Several ways to incorporate incentives for quality include the use of bonuses or premium rebates or the withholding of payment.  Incentives can be used to reward quality in processes of care, health outcomes, or consumer satisfaction.  Incentives for quality can occur on several levels - - i.e., between purchasers/employers and health plans or between health plans and providers.

More employers and public payers are starting to reward those who provide higher-quality care. There are now more than 78 incentives for quality/pay-for-performance initiatives (trials, demonstrations, or plans) across the country. This Bertelsmann survey reports on some of the recent innovations in the use of incentives for quality.

 

I.  CMS' Premier Hospital Demonstration and Doctor's Office Quality Project

The Centers for Medicare and Medicaid Services, an agency of the Department of Health and Human Services, has launched its Premier Hospital Quality Incentive demonstration and Doctor's Office Quality project, both of which include an incentives for quality component.

The Centers for Medicare and Medicaid Services (CMS) is currently using incentives for quality (both awarding and withholding) in demonstration projects with the nonprofit Premier hospital chain; about three hundred hospitals are expected to participate.  The hospitals report data on thirty-four measures in five clinical areas: heart attack, heart failure, pneumonia, coronary artery bypass surgery, and hip and knee replacements.  Hospitals in the top ten percent of performance in any five clinical areas receive a two percent bonus.  Those in the next ten percent of performance receive a one percent bonus.  In the third year, hospitals that do not achieve performance improvements above demonstration baseline will have adjusted payments. The demonstration baseline will be clinical thresholds set at the year one cut-off scores for the lower ninth and tenth decile hospitals.  Hospitals will receive one percent lower DRG payment for clinical conditions that score below the ninth decile baseline level and two percent less if they score below the tenth decile baseline level.  The cost of the bonuses totals $7 million per year or $21 million for three years (http://www.cms.hhs.gov/quality/hospital/PremierFactSheet.pdf). 

The CMS Doctor's Office Quality Project (DOQ) initiative is a measurement, improvement, and incentive pilot for chronic disease and preventative services taking place in Iowa, New York, and California between 2002 and 2005. The Quality Improvement Organizations (or QIOs, CMS state contractors that provide quality improvement assistance to hospitals, physicians offices, home health agencies, and nursing homes) in these three states will work together to develop strategies for quality improvement in physician offices and to test incentives for physicians. Possible incentives include malpractice risk reduction, paid Continuing Medical Education programs related to quality improvement, public recognition, and public reporting. Performance measures to be used are grouped into three areas: 1) clinical quality (measures to be provided by the Physician's Consortium for Performance Improvement); 2) systems of care (measures developed by National Committee for Quality Assurance); and 3) patient experience of care [Consumer Assessment of Health Plans (CAHPS-like measures)].

The clinical quality measures cover:

• Coronary artery disease (CAD)
• Diabetes
• Heart failure (HF)
• Osteoarthritis
• Preventive care services for patients with either CAD, diabetes, HF or osteoarthritis.

 

The systems of care measures include:

• Clinical care management
• Continuity and coordination
• Methods of tracking tests and consultations
• Administrative procedures
• Patient education
• Clinical performance assessment.

 

The patient experience of care measures include:

• Appointment access
• Continuity of care
• Communication
• Health promotion
• Interpersonal treatment
• Office staff
• Integration of care.

The goals for the DOQ project are: define quality of care for chronic disease and preventive services using measures which clinicians believe are reasonable and will facilitate better care; develop strategies for quality improvement for chronic disease and preventive services in physician offices; and test incentives for physicians to participate in quality improvement.  Each of the three QIOs will work with up to one-hundred targeted physicians in their state to document the validity, feasibility, and usefulness of such a program, which may be used as a model for future work conducted by QIOs. Evaluation of the project is scheduled for completion in July 2005 (www.ahqa.org/pub/uploads/B2_WhatsUp_DOQ.ppt, http://company.ipro.org/dox/quality_watch/qw_2002_11.pdf, http://www.lumetra.com/about/contracts/index.asp, http://www.cms.hhs.gov/quality/).

 

II.  Leapfrog Initiative

The Leapfrog Group, a national, nonprofit coalition of more than 150 public and private organizations that provide health care benefits, was created in 2000 by The Business Roundtable (BRT) to address patient safety and quality issues. The program encourages large employers to recognize and reward health plans and hospitals that make improvements in patient safety and quality.  The Leapfrog Group encourages participating employers to reward hospitals that implement three selected hospital safety measures that have been demonstrated to improve quality of care and/or reduce medical errors: computer physician order entry, evidence-based hospital referral, and intensive care unit physician staffing.  The Leapfrog Group's incentives to hospitals to make structural improvements in patient safety primarily relied on public visibility and recognition of the participating hospitals' commitment to improving quality. The program resulted in more than fifty percent of CEOs of hospitals that serve Leapfrog Group members' employees reporting to the public their commitment to implement the safe practices within specified timeframes. The Leapfrog Group also plans to develop a new "performance-sensitivity index" with which each insurer's contracting relationship with providers would be quantified.  Leapfrog Group members would be expected to use the index as an important component of their assessment of insurers (Milstein A., Galvin R.S., Delbanco S.F., Slaber P., and Buck, Jr. C.R., "Improving the Safety of Health Care: The Leapfrog Initiative" Effective Clinical Practice, November/December 2000; http://www.leapfroggroup.org).

 

III.  Rewarding Results

In September 2002, the Robert Wood Johnson Foundation, California HealthCare Foundation, and the Commonwealth Fund provided support for the Rewarding Results Program, that provides seven grants for $4.9 million to pilot projects that will run for three years, 2003-05.  The program is a national initiative to help purchasers and health plans align incentives for high-quality health care.  Rewarding Results was launched by the National Health Care Purchasing Institute and was taken over and is now administered by The Leapfrog Group (http://www.leapfroggroup.org/ RewardingResults/index.htm).  The Rewarding Results project includes seven large demonstrations of incentives for quality, two of which are sponsored by the Integrated Healthcare Association and Bridges to Excellence and are described below.

 

IIIA.  Integrated Heatlhcare Association

The Integrated Healthcare Association (IHA) is a California statewide leadership group of health plans, physician groups, and health systems, plus at large academic, purchaser,  pharmaceutical industry and consumer representatives, involved in policy development and special projects around integrated health care and managed care.  IHA began an initiative in 2002, in which six health plans evaluate and reward performance of their contracting physician groups. On January 15, 2002, IHA officially announced the launch of its "Pay for Performance (P4P)" initiative, a statewide effort under which six health plans will use common measures to come up with a score to evaluate the performance of their contracted physician groups serving commercial HMO enrollees and develop individual health plan quality bonus programs that will pay significant financial incentives based on that performance (see the attachment containing a table on how the financial incentives are determined by each of the six participating health plans).  The measures cover three main areas of physician group activity - clinical quality, patient satisfaction, and investment in information technology (IT):

Condition

Measure

Weighting (Percent of Total Score)

Clinical Quality (Asthma)

The percentage of patients with persistent asthma continuously enrolled for two years and who received at least one dispensed prescription for inhaled corticosteroids. The measure should be reported for each of three age stratifications:

·         5-9 year-olds

·         10-17 year-olds and

·         18 - 56 year-olds

50% for All Clinical Quality Measures

Clinical Quality (Coronary Artery Disease)

The percentage of patients age 18 through 75 years old as of December 31 and who were discharged alive by Dec. 31 for acute myocardial infarction (AMI), coronary artery bypass graft (CABG) or percutaneous transluminal coronary angioplasty (PTCA) and had evidence of LDL-C screening.

Clinical Quality (Diabetes)

The percentage of members with diabetes (Type 1 and Type 2) age 18 through 75 years old continuously enrolled for one year, and who had evidence of Hemoglobin A1c (HbA1c) screening.

Clinical Quality (Childhood Immunizations)

The percentage of children who turned two years old during the measurement year, who were continuously enrolled for 12 months immediately preceding their second birthday, who received each of the following:

·         four DTaP/DT or

·         three IPV/OPV or

·         one MMR or

·         three H influenza  type B or

·       three hepatitis B or one chicken pox vaccine

Clinical Quality (Breast Cancer Screening) The percentage of women age 50 through 69 years who were continuously enrolled for two years, and who had a mammogram.

Clinical Quality (Cervical Cancer Screening)

The percentage of women age 18 through 64 years who were continuously enrolled for 3 years, and who received one or more Pap tests.

Patient Satisfaction

1. Specialty care

2. Timely access to care

3. Doctor-Patient Communication

4. Overall ratings of care

 

40% for Patient Satisfaction

IT Investment

1. Integrate clinical electronic data sets at group level

2. Support clinical decision making at point of care

 

10% for IT Investment



 (http://www.iha.org/Ihaproj.htm).

 

IIIB.  Bridges to Excellence

Bridges to Excellence is a national nonprofit organization whose participants include: physicians, health plans, and large employers.  Bridges to Excellence has implemented programs that provide incentives to physicians who meet selected care standards in treating patients who work for participating employers.  Bridges to Excellence is being introduced in metro areas that are heavily populated by employees of the companies supporting the program. The first initiative, "Diabetes Care Link", has been launched in Cincinnati, Louisville, and Massachussetts and Albany/Schenectady. The second, "Physician Office Link", is being piloted in Massachusetts and Albany/Schenectady. The third, "Cardiac Care Link", is being piloted in Albany/Schenectady.  

Bridges to Excellence's "Diabetes Care Link"enables physicians to achieve one-year or three-year recognition for high performance in diabetes care. The Diabetes Care Link is sponsored by a coalition of employers, including GE, Ford, UPS and Procter & Gamble, as well as health plans like Humana, UnitedHealthcare, Aetna and Blue Cross and Blue Shield.  Physician who would like to participate may choose one of two scoring and reward tracks. The first is an annual certification track that requires the submission of outcomes data; the second is a three-year track that requires the submission of process and outcomes measures. The measures, criteria and scoring are below. The information used comes from the National Standards Diabetes Self-Management Education Program. Organizations such as the American Diabetes Association and the National Certification Board of Diabetes Educators have compiled guidelines on the best quality care for someone with Type II Diabetes. To achieve three-year recognition and rewards, physicians must submit data for all of the measures. To receive a reward for one year, physicians must submit data on HbA1c, blood pressure and lipid testing.





Measures For Both 3-Year Recognition and Rewards and Annual Rewards

Measures

Goal

Points

Frequency

HbA1c* (most recent result)

93%

NA

Once per year

Proportion w/ HbA1c <8%

55%

5.0

 

Proportion w/ HbA1c >9.5%*

<21%

10.0

 

Blood pressure frequency (most recent result)

97%

10.0

Once per year

Proportion w/ BP <140/90 mm Hg

65%

5.0

 

Lipid profile*

85%

5.0

Annual**

Proportion with LDL <130 mg/dl*

63%

5.0

 

Additional Required Measures For 3-Year Recognition

Measures

Goal

Points

Frequency

Eye exam*

61%

10.0

Annual**

Foot exam

80%

10.0

Annual

Nephropathy assessment*

73%

10.0

Annual**

Total Points

70.0

 

Points to Achieve Recognition & Recieve Rewards

52.0

 

Points to Receive Annual Award

30.0

Measures For Both 3-Year Recognition and Rewards and Annual Rewards

Measures

Goal

Points

Frequency

HbA1c* (most recent result)

93%

10.0

Once per year

Proportion w/ HbA1c <8%

34%

5.0

 

Proportion w/ HbA1c >9.5%*

84%

10.0

 

Blood pressure frequency (most recent result)

97%

10.0

Once per year

Proportion diastolic pressure <90 mm Hg

96%

NA

 

Additional Required Measures For 3-Year Recognition

Measures

Goal

Points

Frequency

Eye exam *^

40%

10.0

Annual

Total Points

35.0

 

Points to Achieve Recognition & Recieve Rewards

26.0

 

Points to Receive Annual Award

18.0

 

Special Pediatric Age Requirement: Pediatric age range defined as 0-17 years. Pediatric patients must be 5 years of age or older, before data can be submitted as part of an application for recognition and the rewards from the DQP employer coalition.

Notes:* Consistent with Diabetes Quality Improvement Project and HEDIS measures
** Measure may be performed in the past two years, based on patient-specific criteria
For calculation of results for this measure, the denominator will be those patients from the applicant's sample who have had diabetes for > 5 years

Physicians who participate in the program are highligthed on a website, and physicians who demonstrate they are top performers in diabetes care can earn up to $80 per year for each diabetic patient covered by a participating employer.  In addition, the program offers a suite of products and tools to help diabetics get engaged in their care, achieve better outcomes, and identify local physicians that meet the high performance measures. 

Another Bridges to Excellence initiative is the Physician Office Link, which enables physician office sites to qualify for bonuses based on their implementation of specific processes to reduce errors and increase quality. They can earn up to $50 per year for each patient covered by a participating employer or plan.  In addition, a report card for each physician office describes its performance on the program measures, and is made available to the public (http://www.bridgestoexcellence.com).  The Cardiac Care Link initiative is similar to the Diabetes Care Link, and physicians who demonstrate that they are top performers in cardiac care can earn up to $80 per year for each cardiac patient covered by a participating employer or plan.

The maximum per-physician reward amount available through Bridges to Excellence is $20,000 annually or $50,000 over the life of the BTE program.

The Table is taken from http://www.iha.org/Ihaproj.html

Main points

Main objectives

To improve the quality of health care services by providing incentives to providers to improve quality of care through processes, outcomes, or consumer satisfaction.

Type of incentives

Financial incentives are given or payments withheld depending on performance.

Groups affected

Providers (physicians, hospitals, etc.), Employers/Purchasers, Health Plans, Patients (indirectly)

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral

It is too soon to judge the overall effectiveness of initiatives and incentives for quality.

Political and economic background

In 1996, the Institute of Medicine (IOM) launched a concerted, ongoing effort focused on assessing and improving the US' quality of care.  As part of this effort, the IOM released two reports: To Err is Human: Building a Safer Health System in 2000 and Crossing the Quality Chasm: A New Health System for the 21st Century in 2001.

To Err is Human put the spotlight on how up to 98,000 Americans die each year from medical errors and effectively put the issue of patient safety and quality on the radar screen of public and private policymakers.  The Quality Chasm report described broader quality issues and focused on the need to address quality issues and recommended a redesign of the American health care system.  It offered a set of performance expectations for the health care system of the 21st century, a set of 10 new rules to guide patient-clinician relationships, a framework to better align payment and accountability with quality, and key steps to promote evidence-based practice and strengthen clinical information systems (Institute of Medicine, To Err is Human, National Academy Press, Washington, D.C., 2000; Institute of Medicine, Crossing the Quality Chasm: A New Health System for the 21st Century, National Academy Press, Washington, D.C., 2001).  Furthermore, the RAND Corporation recently conducted the largest and most comprehensive health care quality study ever, which showed that Americans with common health problems receive the "recommended care" just over 50 percent of the time. This study found that there are still major gaps between what we know works and the care patients actually receive (E.A. McGlynn, S.M. Asch, J. Adams, J. Keesey, J. Hicks, A. DeCristofaro A., and E.A. Kerr, "The Quality of Health Care Delivered to Adults in the United States," New England Journal of Medicine 2003, 348: 26; 2635-2645).

The IOM reports and the RAND study helped to spark the recent initiatives to improve quality of care.  One of the major IOM recommendations was that payments for care should be redesigned to encourage providers to make positive changes to their care processes. Ideally, this shift will begin with purchasers and insurers, and filter down through the delivery system to help encourage improvements at all levels. In response to this challenge, employers, physicians, health plans and foundations have developed initiatives to align incentives around higher quality care.

Table shows...

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

Please see #3 and #4.  Both the public and private sectors have taken steps to improve the quality of health care services through the use of incentives.  Quality problems have been documented for years and were nationally highlighted in the IOM reports.  The use of incentives for quality is a relatively new approach to address quality issues.  Initiatives described in #3 are current efforts to use incentives for quality.

Stakeholder positions

The 2001 IOM report Crossing the Quality Chasm: A New Health System for the 21st Century brought quality issues to the forefront.  Groups that have taken the lead in researching and providing incentives for quality include large purchasers of health care benefits such as:

• The Centers for Medicare and Medicaid Services (CMS)
• The Leapfrog Group
• Grantees of Rewarding Results

The main alliances have been with organizations that provide health benefits (i.e. employers).  Purchasers, the federal government and large corporate employers, are the main actors in the use of incentives for quality.  Those affected are health plans, physicians, hospitals, and other providers.  Health plans are also key actors because of their ability to use incentives for quality to contract physicians, hospitals, and health care providers.

Consumers are also stakeholders in quality initiatives.  Quality information is made public to educate consumers on quality and how to select providers who provide quality health services.  One example of the role that consumers play involves some purchasers placing providers into performance-based benefit plan coverage tiers which offer lower levels of out-of-pocket payments to consumers who select providers within more favorable performance tiers.

Influences in policy making and legislation

Most of the initiatives that use incentives for quality have been voluntarily implemented by public and private organizations.  The recent Medicare legislation that was signed into law on December 8, 2003, includes a number of provisions that provide incentives for quality.  The 2003 Medicare legislation (P.L. 108-173) calls for demonstrations whereby Medicare will pay physicians a per-beneficiary bonus if specified quality standards are met.

Table Shows

Adoption and implementation

Please see #5.3.

Monitoring and evaluation

The question that needs to be considered is whether incentives actually affect behavior and ultimately quality and patient health status. Efforts to collect and standardize data on the effectiveness of incentives for quality are ongoing.  For example, the Agency for Healthcare Research and Quality is sponsoring an overall evaluation of the Reward Results program's impact and effectiveness (described in 3).  Very little is currently known about effects of incentives for quality efforts (V. Maio, N. Goldfarb, C. Carter, and D. Nash, Value-Based Purchasing: A Review of the Literature, The Commonwealth Fund, May 2003).

Expected outcome

Other strategies for improving quality (i.e. collecting information and data on the quality of care provided by health plans and providers and educating consumers on quality issues), in addition to incentives, must also be implemented for the incentives to work.

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch

Further research needs to be done to assess the impact of incentives on increasing the delivery of clinically effective care and improvements in patients' health.

References

Sources of Information

K. Davis, C. Schoen, S.C. Schoenbaum, A-M. J. Audet, M.M. Doty, and K. Tenney, Mirror, Mirror on the Wall: Looking at the Quality of American Health Care Through the Patient's Lens, The Commonwealth Fund, January 2004.

N.I. Goldfarb, V. Maio, C.T. Carter, L. Pizzi, and D.B. Nash, How Does Quality Enter into Health Care Purchasing Decisions?, The Commonwealth Fund, Issue Brief #635, May 2003.

S. Leatherman, D. Berwick, D. Iles, et al, "The Business Case for Quality: Case Studies and an Analysis," Health Affairs 22:17-30

V. Maio, N. Goldfarb, C. Carter, and D. Nash, Value-Based Purchasing: A Review of the Literature, The Commonwealth Fund, May 2003.

Open Letter. Paying for Performance: Medicare Should Lead, Health Affairs 22(6):8-10.

Institute of Medicine, To Err is Human, National Academy Press, Washington, D.C., 2000.

Institute of Medicine, Crossing the Quality Chasm: A New Health System for the 21st Century, National Academy Press, Washington, D.C., 2001.

E.A. McGlynn, S.M. Asch, J. Adams, J. Keesey, J. Hicks, A. DeCristofaro A., and E.A. Kerr, "The Quality of Health Care Delivered to Adults in the United States," New England Journal of Medicine 2003, 348: 26; 2635-2645.

Centers for Medicare and Medicaid Services Premier Demonstration (http://www.cms.hhs.gov/quality/hospital/PremierFactSheet.pdf)

CMS Doctor's Office Quality Project informational websites (www.ahqa.org/pub/uploads/B2_WhatsUp_DOQ.ppt, http://company.ipro.org/dox/quality_watch/qw_2002_11.pdf, http://www.lumetra.com/about/contracts/index.asp, http://www.cms.hhs.gov/quality/)

The Leapfrog Group (http://www.leapfroggroup.org)

Rewarding Results (http://www.leapfroggroup.org/RewardingResults/index.htm)

Integrated Healthcare Association (http://www.iha.org/Ihaproj.htm)

Bridges to Excellence (http://www.bridgestoexcellence.com)

Reform formerly reported in

Tort Reform - Medical Malpractice Process Stages: Umsetzung, Evaluation, Strategiepapier, Gesetzgebung, Idee, Pilotprojekt

Author/s and/or contributors to this survey

Phuong Trang Huynh (reviewd by Anne-Marie Audet and Robin Osborn)

Empfohlene Zitierweise für diesen Online-Artikel:

Phuong Trang Huynh (reviewd by Anne-Marie Audet and Robin Osborn). "Incentives for Quality". Health Policy Monitor, 24/06/2004. Available at http://www.hpm.org/survey/us/c3/1