Slide 1

Gail R. Wilensky Project HOPE April 9, 2008 Paying for Performance Starting with MA Slide 2 Pay for Performance Remains Controversial Really Mean Rewarding Excellence Besides getting what we pay for now and dont like it! Encouraging Improvement that is quality and efficiency and Slide 3 Whats the Problem? Spending growth rates are unsustainable - 2.5% annual growth faster than the economy (1960-2004) Lots of problems with quality On average, about half of whats appropriate Lots of problems with patient safety 95,000 medical errors Slide 4 Different Types of Fiscal Pressure Trust Fund General Revenue Insolvency projected in 2019 For rest of health care: Pressure on wages Less for non-health spending Pressure on other govt spending For Medicare: Slide 5 Long Term Pressures are Huge! If Medicare/Medicaid grow at GDP + 2.5% By 2030: will account for 11.5% of GDP By 2030: will account for 8.4% of GDP If Medicare/Medicaid grow at GDP + 1% (In 2005: 4.2%) (With Social Security: 17%) Slide 6 How Big A Problem? Some historical facts --- Overall tax rate last 50 years: 18.5% of GDP Allowing tax cuts to expire adds (only) 2% to rev: 2030 Previous in entitlements handled not by ing taxes Major budgetary challenges ahead! Slide 7 Incentives Are A Big Problem Same reimbursement for best in class and worst in class Private sector hasnt been much better 20+ years getting it exactly wrong! ( DRGs, RBRVS, Home Care, Nursing Homes and MA) Physician fee schedule is even worse penalizes efficient docs Medicare -- Slide 8 First Things First Need a National Measurement System Need a National system to reach National goals Coherent, goal oriented system to access/report performance Information must be transparent/available Begin with starter set/ then comprehensive measures Slide 9 2006 IOM Report on P4P Start with pay for reporting Phased approach Initial funding from existing funds except docs Initially use provider-specific funds; move to consolidated pool shared accountability Start now, go slow, active learning Slide 10 Fortunately, MA Already Has Reporting System HEDIS -- Healthcare Effectiveness Data and Information Set HOS - Health Outcomes Survey CAHPS -- Consumer Assessment of Healthcare Providers and Systems Unfortunately, not all MA plans report; MSAs and PFFS exempted Slide 11 How to Proceed? Slowly -- in terms of $ at risk Quickly -- in terms of start time Sooner rather than later is best Dont need new legislation (I think) Slide 12 Budget Neutral Strategies can Vary -- Pay out differentially if meet certain HEDIS levels -- Pay out according to HOS or CAHPS measures Use a portion of the MA premium that is above FFS Continue public reporting as well as P 4 P Slide 13 Going Forward Need to make quality information available for FFS in the market area Need to bring in other MA Plans Begin P 4 P in other areas of Medicare Hospitals -- ready as well as MA Physicians -- critical but harder Slide 14 Many Areas Need Further Research Most of the focus has been on quality measures need more effort on efficiency Assess impacts of weighting strategies quality/efficiency; improvement/attainment How big an incentive to change physician behavior? How to adjust for social compliance differences Slide 15 Biggest Worry Unintended Consequences Patient selection Widening performance gaps Increasing disparities Teaching to the test Slide 16 Bottom Line: Going Forward Reward/plans/institutions/clinicians who provide high quality/efficiently produced care Also need to involve consumers value-based insurance; reward healthy lifestyles Need to realign financial incentives And better information on comparative effectiveness would help! Slide 17 Will These Changes Bend the Curve Easier politically to imagine these changes Alternatives get really ugly, really quickly Dont know how much difference better information and better incentives will make