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					        Medicare’s New Physician
        Pay-for-Reporting Initiative

The Drive to Report Quality
        Measures
                   Cynthia A. Brown
 Director, ACS Division of Advocacy and Health Policy

                    Las Vegas, NV
                    April 24, 2007
Who is Driving P4P?


    Employers
    Patients
    Health Plans
    Policy Experts
    Government
   Why the Drive Toward P4P?



Cost + Quality = Value


Evidence that the U.S. system varies in all three!
        Private Sector Perspective

 Employers:
  – Health care costs driving production costs
  – Real concerns about marketplace competition
 Patients:
  – Want to preserve access to health insurance
  – Marketplace has eroded trust
     • Need tools to assess cost and quality
 Health plans:
  – Do not want to repeat managed care backlash
  – Consultants eager to provide ―black-box‖ controls
  – Want to avoid local mandates
        Government Perspective
 State and Federal health care costs driving
  public sector budgets
 Governments must respond to patient needs
 Market power:
  – Federal government is the largest insurer
     • 40% of all health care costs
     • Includes most expensive: end-of-life care
 Influence:
  – Physicians and others rely on Federal payments
  – SGR makes physicians even more reliant on action
    by government
                                Cost:
               National Health Expenditures Per Capita
                             (1980-2015)


   $13,000
                             Actual                                               Projected
   $12,000                                                                                                  $ 12, 357

   $11,000
   $10,000                                                                                      $ 10, 339

    $9,000
    $8,000                                                                          $ 8, 636


    $7,000
                                                                       $ 7, 129
    $6,000
                                                           $ 6, 280
    $5,000                                         $ 5, 879
                                           $ 5, 485
    $4,000
                             $ 4, 471
    $3,000
    $2,000
    $1,000
               $ 1, 067
        $0
             1980         1998      2000   2002           2004        2006         2009        2012           2015



Source: Centers for Medicare and Medicaid Services (CMS)
                                        National Health Expenditures:
                                         Share of GDP (1980-2015)

                                    NHE             Projected NHE                 GDP Share               Projected GDP Share

               $4,500                                                                                                                        25%

               $4,000

                                                                                                                                             20%
               $3,500

               $3,000
                                                                                                                                             15%




                                                                                                                                                   GDP Share
    Billions




               $2,500

               $2,000
                                                                                                                                             10%
               $1,500

               $1,000
                                                                                                                                             5%

                $500

                  $0                                                                                                                         0%
                        1980 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

                                                                       Calendar Year




Source: CMS
                             Changes in Employer Premiums,
                            Inflation, and Earnings (1989-2005)
                     25



                     20
                             Health Insurance Premiums                  Workers' Earnings                  Overall Inflation
                             18.0
        Percentage




                     15
                                                                                                       13.9
                                                                                             12.9

                                                                                   11.0                          11.2
                     10                                                  8.3
                                                                                                                           9.2
                                       8.5

                                                                4.8
                             5.1
                      5                                 4.4
                                               3.3               3.5     3.7       4.3
                                       3.2              3.7                        3.3                                     3.5
                            4.1                                                              2.6       2.9                 2.7
                                       2.5     2.9                        3.1                          2.2       2.3
                                                                                                                 2.2
                                                                 2.3                         1.6
                                               0.8      1.4
                      0
                          1989      1993     1996    1998     1999     2000     2001      2002      2003      2004      2005



Source: CMS
             Medicare Beneficiaries as a Share of the U.S.
                       Population (1970-2030)


                                           25                         65 & Over    Disabled             22.0%

                                           20
                                                                                                18.5%

                                                                          13.9% 15.0%
                   Percent of Population




                                           15          12.1% 13.1%
                                                9.5%
                                           10



                                            5


Total Number of
                                            0
Medicare                                        1970    1980   1990         2000         2010   2020    2030
Beneficiaries in
Millions:                                       20.4   28.4    34.3        39.6         46.5    61.6    78.6



Source: CMS
              Trends in Medicare Spending




Source: CMS
                        Costs are Not Only High-
                           They are Variable




Source: Care of Patients with Severe Chronic Disease (2006), The Center for the Evaluative Clinical
Sciences, Dartmouth Medical School
                Variations in Preventable Acute Care
                Admission Rates per 100,000 (2000)




Source: Agency for Healthcare Research and Quality (AHRQ)
                        Medicare Hospital 30-Day Readmission
                             Rates and Associated Costs
                           by Hospital Referral Regions (2003)

      Rate of hospital readmission within 30 days                   Readmission reimbursement as percent of
                                                                    total reimbursement for all admissions
30                                                             50
                                                                                                           45

25
                                             22                40
                                                                       35                        34
                                    20
20     18
                                                                                        30
                          16                                   30
                14                                                             24
15

                                                               20
10

                                                               10
 5


 0                                                              0
     National   10th     25th      75th      90th                   National   1         2       3         4
      mean                                                           mean
                          Percentiles                                                Quartile of regions
                                                                                           ranked
                                                                                    by readmission rates

 Data: G. Anderson and R. Herbert, Johns Hopkins University analysis of 2003
 Medicare Standard Analytical Files (SAF) 5% Inpatient Data.
             Procedure Utilization Rates per
             1,000 Medicare Enrollees (2003)

                Carotid     Choly.       Colect.   AAA      Back
                End.                               Repair   Surgery
    National    3.02        4.29         1.76      0.97     4.02
    Average
    CA          2.25        3.82         1.51      0.67     3.70

    IA          3.19        4.28         2.05      1.11     4.94

    MA          2.39        3.14         1.93      0.95     2.85

    NV          2.73        3.21         1.59      0.94     4.59


Source: Dartmouth Atlas of Health Care
                  Potentially Preventable Adverse Events and
                      Complications of Care in Hospitals
    Risk-adjusted rate per 10,000
                                                     1997/1998**           2000                  2002   2003
    discharges*
    Decubitus ulcer (pressure sore)
          National                                       199                217                  233    NA
          Medicare                                       206                225                  251    267
    Postoperative pulmonary embolism
    or deep vein thrombosis
          National                                        65                 75                   84    NA
          Medicare                                        62                 71                   86    92
    Postoperative sepsis
          National                                        85                105                  116    NA
          Medicare                                        80                 97                  111    120
    Postoperative respiratory failure
          National                                        23                 34                   40    NA
          Medicare                                        25                 34                   46    50
    Accidental puncture or laceration
          National                                        27                 33                   38    NA
          Medicare                                        31                 32                   36    34
    Infection due to medical care
            National                                      18                 20                   23    NA
            Medicare                                      20                 20                   24    25
•Rates exclude complications present on admission and are adjusted for gender, comorbidities,
and diagnosis-related group clusters. ** National rate is for 1997, Medicare rate is for 1998.


Data: National estimates—Healthcare Cost and Utilization Project, at http://www.ahrq.gov/HCUPnet);
Medicare estimates—MedPAC analysis of Medicare administrative data using AHRQ indicators and methods
              Per Capita Spending on Medical
           Services by OECD Country (1980-2004)


           5000
                                                                                                                                $4,451
           4500
           4000
                                                                                                                       $3,408
           3500
           3000
           2500                                             $2,308
                                                                                     $2,153
                                $1,984                                                          $2,027 $1,951     $2,132
           2000                                                             $1,639
                                                   $1,423
                     $1,445 $1,406
           1500                           $1,348                     $1,365

           1000                          $675
                                                                     $783
                                                                                                                $827
                  $617
            500
              0
                         Canada                 France                 Germany                 Japan            United States

                                                        1980         1990            2000     2004




OECD=Organization for Economic Cooperation and Development
                      Patient Reported Medical Mistake,
                 Medication Error, or Test Error in Past 2 Years

Percent 50



                                                                               34
                                        30
                         27
                                                                     25
                                                        23                22
              25




                0
                        AUS            CAN             GER           NZ   UK   US


Source: 2005 Commonwealth Fund International Health Policy Survey.
     Medicare Physician Payment

 Total payments continue to escalate
  – Major procedures and primary care are exceptions
 Current tools for controlling spending are
  ineffective, harmful
  – SGR will produce pay cut of about 10% in 2008, and
    an 5% annually for the next 7 years
  – Budget neutrality is not rational!
 Rebuilding the system: $250+ billion
 Defining the problem:
  – How much we are spending? OR
  – What we are purchasing?
Recent Medicare Payment History

     Conversion Factors Updates Under the SGR
               for the Past Five Years

2
1
0                                               Conversion factor
-1                                              under SGR

-2
-3                                              Actual conversion
-4                                              factor after
                                                Congressional action
-5
-6
     2002   2003   2004   2005   2006   2007
            RBRVS Has Slashed Pay for Surgery

Procedure       % change    Procedure    % change
                1989-2007                1989-2007
Cataract        -59.9%      Colectomy    -3.0%
Total Knee      -35.6%      Laminectomy -50.9%
Total Hip       -43.3%      Hernia       -18.0%
CAE             -34.8%      CABG         -39.9%
TURP            -30.2%      Part.        -2.2%
                            Mastectomy
            RBRVS Impact With Inflation

Procedure      % change       Procedure        % change
               1989-2007                       1989-2007
Cataract       -69.3%         Colectomy        -25.8%
Total Knee     -50.7%         Laminectomy -62.4%
Total Hip      -56.6%         Hernia           -37.3%
CAE            -50.1%         CABG             -54.0%
TURP           -46.6%         Part. Mast.      -25.2%
                 *Assumes annual MEI of 1.5%
  Congress Has Us Over a Barrel

              Future Cuts: 2008-2015

30
20
10
 0
                                                              Conversion Factor
-10
                                                              MEI
-20
-30
-40
-50
      2008   2009   2010   2011   2012   2013   2014   2015
                                         Health Care Opinion Leaders:
                                       Views on Controlling Health Costs
                                “How effective do you think each of these approaches would be
                                   to control rising costs and improve the quality of care?”
                                          Percent saying “extremely/very effective”

                                              Reduce inappropriate medical care                           75%
                            Use evidence-based guidelines to determine if a test,
                                        procedure should be done
                                                                                                      70%

                                           Increased and more effective use of IT                   66%

                    Increase the use of disease and care management strategies
                                        for the chronically ill
                                                                                                    65%

                    Reward providers who are more efficient and provide higher
                                          quality care
                                                                                                61%

                                         Allow Medicare to negotiate drug prices              57%

                                Reduce administrative costs of insurers, providers        54%
                   Establish a public/private mechanism to produce, disseminate
                             information of effectiveness, best practices
                                                                                          54%

                       Have all payers, including private insurers, Medicare, and
                         Medicaid, adopt common payment methods or rates
                                                                                         51%

                        Consolidate purchasing power by public, private insurers
                           working together to moderate rising costs of care
                                                                                        50%


Note: Based on a list of 19 issues.

Source: The Commonwealth Fund Health Care Opinion Leaders Survey, Jan. 2007.
           The Solution?

 Join forces!
  – Government, plans, employers
  – Patients and providers invited to the table
 P4P or value-based purchasing
  – Pricing transparency
  – Provider competition
  – Arm patients with information
  – Give patients ―skin in the game‖
       Why is P4P a Solution?
 What they say:
  – Costly complications will be avoided
  – Chronic conditions will be managed and
    hospitalizations avoided
  – Evidence-based care will eliminate
    unnecessary and costly services
  – Payment incentives to adopt HIT and manage
    chronic conditions will change physician
    behavior
      Why is P4P a Solution?
 What they say more quietly:
  – Patients will be held more accountable
    • Tiered networks
    • Defined contribution insurance plans
 Employers and the government recognize
  that patients need information before
  being held accountable
  – P4P will be followed by public reporting on
    providers
Health System Reform Policy
    Experts/ Advocates
     ―Moving the Marketplace‖

―Together, the Departments of Defense, Health and Human
Services, and Veterans Affairs and the Office of Personnel
Management are the biggest purchaser of health care in the
nation. Federal programs cover some 93 million people, nearly
40 percent of the nation's insured. We are using this critical
mass to begin moving the marketplace.‖

            ---   U.S. Department of Health and Human Services
                  Healthcare Transparency Web Site
                  http://www.hhs.gov/transparency/federal/
                    Most Insured Have No Quality/ Cost Information
                              to Make Informed Choices

                                                       Comprehensive   HDHP/CDHP
 Health plan provides information on quality of care
 provided by:
  Doctors                                                  14%           16%
  Hospitals                                                 14            15
 Health plan provides information on cost of care
 provided by:
  Doctors                                                   16            12
  Hospitals                                                 15            12
 Of those whose plans provide info on quality, how
 many tried to use it for:
  Doctors                                                   42            54
  Hospitals                                                 25            45
 Of those whose plans provide info on cost, how
 many tried to use it for:
  Doctors                                                   15            36

  Hospitals                                                 14            32



Source: Commonwealth Fund Survey
 Alphabet Soup in Multi-Stakeholder
Quality Measure Development Groups
Medicare Provider Report Cards

 CMS ―Compare‖ programs
  – Hospitals
  – Dialysis Facilities
  – Home Health Agency
  – Nursing Homes


 http://www.cms.hhs.gov/center/quality.asp
CMS’s Hospital Compare
Dialysis Facility Compare
Private Sector Physician Report Cards
                   Bridges to Excellence
                                      BTE Markets:
 Focus on primary care
                                      Arkansas
 Feeds into Health Grades            California
                                      Colorado
 Used in incentive plans by          Connecticut
most major insurers                   Delaware
                                      Georgia
                                      Illinois
                                      Kentucky
                                      Maine
                                      Maryland
                                      Massachusetts
                                      Minnesota
                                      New Jersey
                                      New York
                                      North Carolina
                                      Ohio
                                      Virginia
                                      Washington
                   State Programs: MA


Used by all major MA
health plans, quality
measures based on
HEDIS. Primary care
and pediatrics only.




   http://www.mhqp.org/
                   State Programs: MA

Physician
specific
information on
education and
training,
insurance plans
accepted, honors
and awards,
publications,
malpractice
history,
disciplinary and
criminal actions



http://profiles.massmedboard.org/MA-Physician-Profile-Find-Doctor.asp
                     State Programs: NY

Information available
for all NY physicians
on education,
practice information,
legal actions,
professional activity,
and personal
statements.




 http://www.nydoctorprofile.com/
Consumer Ratings


             Feeds ―Patient
             Experience
             Survey‖
             information in
             HealthGrades
             reports
                       Consumer Ratings

Free reports on
patient
rankings of
―helpfulness
and
knowledge.‖


5-point rating
system of
―smiley faces‖

    Good
    Average
    Poor



   http://www.ratemds.com/
                    A Federal Priority




www.hhs.gov/transparency
             ―Four Cornerstones‖ of Value-
                  Driven Health Care
         Connecting the System (EHR standards)
         Measure and Public Quality
         Measure and Publish Price
         Create Positive Incentives
                           quality
                           price
                           value

www.hhs.gov/transparency
                           Leavitt’s Vision




www.hhs.gov/transparency
     CMS’s ―Price Transparency‖ Initiatives

 Hospital inpatient
   – Top 30 elective DGR payments by hospital
   – Other high volume elective DRGs
 Physicians
   – Service volume, price, spending data by locality
   – 72 common services in facility settings
   – 19 services commonly provided in office
 Ambulatory surgical centers
   – Charge and payment data by locality for 41 DRGs
 Hospital outpatient
   – 61 commonly provided procedures by locality
           http://www.cms.hhs.gov/HealthCareConInit/
              RHQDAPU FY 2007
 Medicare’s ―Reporting Hospital Quality Date for
  Annual Payment Update‖ program
  – In FY 2007, hospitals that fail to report quality data
    will experience 2% payment cut
 Measures pertain to:
  –   AMI (aspirin, beta blockers, etc.)
  –   Heart failure
  –   Pneumonia
  –   Surgical Care Improvement Project (SCIP)
      (antibiotics)
Physician Quality Reporting
   Initiative: Its Roots
             PQRI Legislation
 The Physician Quality Reporting Initiative (PQRI)
  – Authorized by the Tax Relief and Health Care Act of
    2006 (PL 109-432)
  – Froze Medicare fee schedule conversion factor at
    2006 rate
  – Created 1.5% pay incentive for reporting quality
    measures July-December, 2007
 Anticipated by CMS
  – Physician Voluntary Reporting System (PVRP)
 Earlier Congressional proposals far more
  onerous
          Good for Surgery?

 Price controls have not worked
  – Surgery endures pay cuts due to volume
    growth elsewhere
  – Time to focus on services instead of ―price‖
 Truly evidence-based care should
  eliminate unnecessary spending
 Better managed chronic conditions should
  serve everyone’s interests
           Concerns for Surgery
 Payors lack the tools to measure quality
  – Especially true for surgical services
 Little appreciation of harmful impact of bad
  measures
 Current models do not lend themselves to
  system-based care
  –   One size does not fit all
  –   Challenges for facility and office based care
  –   Attribution issues in teams
  –   Outcomes more appropriate for surgery, generally
             The Future for P4P

 It is coming; all stakeholders want it
   – Little sympathy for protestors, or for those without measures
 PQRI is only the beginning
 It will cause payment redistributions
   – Among physicians—definitely
   – Among specialties—perhaps
 Measure harmonization an important goal
   – Sensitivity to dangers posed by complex administrative burden
 Common data stream/ data set also a goal
   – Poor performers will eventually be left behind!

				
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