Home Cover Story Is pay for performance in your future?

Is pay for performance in your future?

March 2005

Published in the March 2005 issue of Today’s Hospitalist

First of a two-part series.

After years of fits and starts, the pay-for-performance movement looks like it may finally be here to stay. That has some hospitalists asking themselves whether programs that reward physicians for improving quality will help or hurt their growing specialty.

While quality incentives make many physicians nervous, some hospitalists are taking a distinctly different view. They predict that these quality incentive programs “as long as they’re well-designed and administered “have the potential to help hospital medicine cement its growing role in U.S. health care.

The logic is simple: As health plans and large payers start pressuring hospitals to collect data on quality measures and improve their outcomes, who better than hospitalists can help guide those efforts? Hospitalists can not only help themselves by sharing quality bonuses with their hospitals, but they can help improve patient care and shore up their institution’s finances.

Here’s a look at how three hospitals are implementing three very different pay-for- performance programs, and how hospitalists at each of the facilities are taking a leading role.

Massachusetts: Working with the Blues

While the media has lately focused considerable attention on the growing numbers of pay-for-performance measures for outpatient physicians, several large payers have already implemented quality incentives in the inpatient setting.

Medicare, for example, is conducting several demonstration projects in the area. One of those initiatives, the Hospital Quality Alliance, requires hospitals to report data on more than 20 measures on care of acute myocardial infarction, heart failure and pneumonia. While Medicare isn’t currently using data from those reports to financially reward or punish hospitals for their performance, hospitals that didn’t report the data last year are now receiving lower Medicare payments.

And in several states, the Blues are building pay-for-performance programs for hospitals. Blue Cross Blue Shield of Massachusetts last year launched a quality-incentive program based on similar quality measures from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Those indicators, which are known as “core measures,” focus on conditions like acute myocardial infarction, heart failure and community-acquired pneumonia.

One of the hospitals that has participated in the Massachusetts Blues program is Mercy Medical Center in Springfield, Mass. Because hospitalists at Mercy provide about 85 percent of the hospital’s inpatient care, the hospitalist program was instrumental in helping design the hospital’s involvement in the project.

Winthrop Whitcomb, MD, a longtime hospitalist who founded Mercy’s hospital medicine program more than 10 years ago, explains that the hospital agreed to measure its performance on three indicators: pneumococcal vaccine for pneumonia patients, ACE inhibitors for heart failure patients with a left ventricular ejection fraction of less than 40 percent, and assessment of left ventricular function in patients diagnosed with heart failure. If the hospital met certain performance thresholds, it would receive bonus payments from the Blues above and beyond regular payments.

Dr. Whitcomb, who is director of clinical performance improvement at Mercy, says that to meet the pneumococcal vaccine measure and qualify for bonus money, the hospital needed to vaccinate 45 percent of patients with pneumonia. The national average at that time, by comparison, was 38 percent. On the other two measures, Mercy needed to reach an 85 percent threshold to be eligible for bonus money.

The role of hospitalists

Dr. Whitcomb explains that linking quality goals and financial incentives led to immediate improvements on the three measures. The number of pneumonia patients who received the pneumococcal vaccine, for example, jumped from 45 percent in 2003 to about 87 percent in 2004.

Because Mercy met the goals of all three measures, the hospital received a quality bonus that Dr. Whitcomb described as “significant.” Mercy gave half of that bonus money to the 14 full-time physicians in its hospitalist group, who split the money evenly.

While Dr. Whitcomb didn’t reveal the exact amount each hospitalist in the program received, he says it equaled about 7.5 percent of each physician’s annual pay. That number, he says, was a powerful incentive for the group.

“It illustrates the first principle of any incentive program,” he explains, “which is that the incentive bonus needs to be a meaningful sum.” Strategies like order sets, Dr. Whitcomb adds, become “relatively superfluous once there are financial incentives for the doctor to do the right thing.”

To make sure the hospitalist group met the three quality measures, Dr. Whitcomb and the hospitalist group tried to boost performance on all the Joint Commission’s core measures, not just the three that were part of the Blues program. The group conducted regular education sessions with all the hospitalists who work at Mercy “not just those in his group ” and the primary care physicians who care for their hospitalized patients. The bonus money was based on the performance of all physicians at Mercy, so everyone’s performance needed to improve, not just that of the hospitalists.

To draw attention to the core measures, the Mercy hospitalist group placed a prompt sheet on the order section of all medical charts that outlined all of the Joint Commission’s core measures, not just the three that were part of the program. In addition, physicians and nurses in the program reviewed charts for patients whose care didn’t meet the core measures.

While those educational efforts helped the hospital improve its performance on all the Joint Commission’s core measures, Dr. Whitcomb says that the presence of a well-established hospitalist program was the real reason the hospital did so well. He explains that it would have been much more difficult to mobilize and motivate primary care attendings to meet these measures.

“Because we have hospitalists doing 85 percent of the work,” he explains, “it was relatively easy to change processes like increasing rates of pneumovax compliance.”

Oregon: A nine-point plan

Across the country in Corvallis, Ore., the hospitalist program at Good Samaritan Regional Medical Center set up a quality incentive program not at the behest of a health plan, but the director of the hospitalist program.

Cliff Hall, MD, director of the inpatient care service at Good Samaritan Regional Medical Center in Corvallis, Ore., says that when he started the hospitalist program several years ago, he wanted to create an incentive plan that would focus on quality more than productivity measures, which are popular in many hospitalist programs.

Today, that program focuses on nine measures. Like the program at Mercy Medical Center, the Good Samaritan plan examines care for common inpatient conditions such as treatment of stroke, heart failure, acute myocardial infarction and community-acquired pneumonia. (For more details on the nine measures, see “How it works: one hospital’s quality incentive measures,” on the facing page.)

Dr. Hall says that for stroke patients, for example, the measures require that physicians prescribe antiplatelet agents, document lipid status, offer smoking cessation counseling, and prescribe anticoagulation for patients suffering from atrial fibrillation. For patients with community-acquired pneumonia, the measures require physicians to administer antibiotics within four hours of arrival at the hospital.

Each of the nine measures is worth between five and 20 points, for a total of 100. If the hospitalist group meets all nine measures, it earns 100 percent of a quality fund set aside by the hospital.

The hospital funds its bonus program by contributing $25 for every patient managed by its hospitalists, whether it’s a patient the hospitalists admit, consult on, or see in the emergency room and then send home.

In the first year, the bonus funds were essentially “new” money, or reimbursement that the hospitalists would not have otherwise received. In the last two years, the hospital has funded the quality program with monies that the hospitalists would have otherwise been eligible for in the form of cost of living increases.

For the first two years of the bonus program, the hospital was still ironing out the kinks in its data collection system, so it gave the hospitalists 100 percent of the quality money. In 2004, the first year that all of the data were in, the hospitalist program scored a total score of 92.5. Each of the program’s full-time physicians received a bonus that was slightly less than 10 percent of their annual salary.

Why didn’t the program receive the full 100 points? Dr. Hall says that after reviewing documentation, he realized his physicians weren’t performing as well as they had thought.

With some heart failure patients, for example, the hospitalists didn’t document the left ventricular ejection fraction as often as they should have, and they weren’t always starting antibiotics in CAP patients as quickly as they had thought.

“If you had asked me, I would have said that we were doing that within four hours,” he explains, “but that wasn’t always the case. So now we’re figuring out ways of making sure that antibiotics are started in the emergency room.”

Michigan: A new breed of incentive plan

It’s no coincidence that the above two programs measure physician performance on similar clinical areas like heart failure and pneumonia. Many of the larger payers and health insurers in the country are now using a set of quality indicators that have been reviewed and approved by the National Quality Forum, a standard-setting group.

This standardization is a good thing for hospitals and physicians. Once payers and health plans begin adhering to the same quality measures, health care providers will have to collect information only once. Instead of having to track your pneumococcal vaccination rate five different ways for five different payers, you can collect and report the information once.

But even as the pay-for-performance movement begins to settle into a groove, with more and more programs using the same indicators to measure performance, there are bold new experiments on the horizon.

Take the Physician Group Practice Medicare Demonstration Project announced earlier this year by the Centers for Medicare and Medicaid Services (CMS). Instead of focusing on a handful of disease states, like the above two programs, this new initiative aims to measure nearly all of the care a given group of patients receives.

In April of this year, the CMS will begin comparing how much 10 groups enrolled in the program spend to care for a large group Medicare patients. If those groups spend less than other providers in their community on similar patients, they will receive a share of those savings from Medicare.

The groups will continue to receive fee-for-service payments for caring for those Medicare beneficiaries, but they will have to invest in programs to control those patients’ health care costs. And because the sickest of Medicare patients are likely to wind up in the hospital, the groups participating in the program will likely direct a fair amount of resources to the inpatient setting ” and hospitalists. The University of Michigan Health System in Ann Arbor, for example, one of the 10 groups participating in the program, plans to bolster inpatient services to improve care for Medicare patients that are hospitalized.

The importance of inpatient care John E. Billi, MD, associate dean for clinical affairs at the University of Michigan Medical School, says the medical center will focus on discharge planning to help manage the problems that put some Medicare beneficiaries in the hospital in the first place. He explains that the university will provide extra care coordination and management for these patients, partially in the form of extra help for hospitalists.

“We’re going to hire additional assistants for the hospitalists,” Dr. Billi says. “That may be the equivalent of a ward clerk or medical assistant who can help with the tasks the hospitalists need to get patients discharged effectively and provide that interim follow up between the discharge and when patients visit their doctor. It’s more help for the hospitalists.”

The university plans to ramp up its existing disease management program for patients with heart failure, which Dr. Billi says is the most common reason for admission among the university’s Medicare population. The university will also expand disease management programs focusing on patients with diabetes, asthma and coronary disease, as well as a geriatrics program for frail elderly patients.

Dr. Billi notes that if the university reaps any rewards from the program in the form of savings, it will not share any of the money with physicians directly. It will instead use those dollars to pay for infrastructure changes/investments and support to make it easier for physicians to deliver high-quality, cost-efficient care.

In Dr. Billi’s view, the money that comes from quality incentive programs just barely pays for the extra care and management that physicians provide. Plowing the money back into the system benefits everyone, he says, including physicians.

“If you ask busy hospitalists what they want,” Dr. Billi explains, “a small raise or more hands to help get the difficult work done and take care of complex patients, I think I know what the answer will be. What we can do for both our doctors and our patients “because this type of initiative benefits both of them “is provide extra assistance for the complicated patients that we take care of today.”

“It’s no longer a straightforward pneumonia patient,” Dr. Billi continues, “especially at a place like the University of Michigan. Instead, it’s pneumonia in a patient on immunosuppressant drugs with other complications, and those complicated patients need extra hands. There is a lot of pressure to cut support personnel, and if we can find an alternative revenue stream through these demonstration projects, we’ll be providing something very valuable to our physicians.”

An ever-rising bar?

While the boom in pay-for-performance programs is generating excitement in some quarters, many hospitals and physicians wonder how these initiatives will reward top-performing hospitals. Will health care providers that are doing a great job hit a glass ceiling “and stop receiving bonuses to support the additional infrastructure they’ve added?

A number of projects report big gains in measures for caring for pneumonia patients, from better rates of pneumococcal vaccine to faster administration of antibiotics. Will high performers be penalized or denied bonuses once they reach high vaccination levels?

Because it’s still so early in the pay-for-performance movement, there are no definite answers. Some insurers and payers reportedly want to see continual improvement, which could be a problem for hospitals that are top performers.

There are signs, however, that at least some health plans and employers realize the conundrum that high performing hospitals could face. The Leapfrog Group, the coalition of large employers and other purchasers of health care, is getting ready to unveil a pay-for-performance program that will reward not only the top performers, but health care providers that show improvement.

Suzanne Delbanco, CEO of The Leapfrog Group, explains that if a hospital is not in the top group, for example, but it moves from group three to group two and holds that gain, it will receive some kind of payment to recognize the savings it produces by improving its performance.

“Everyone realizes that if we reward only the best performers,” she says, “you slowly but surely siphon resources from those that really need the most improvement.”

While he acknowledges that there are very real concerns about where pay for performance is headed, Dr. Whitcomb from Mercy Medical Center says he thinks that quality incentive programs have the potential to invigorate hospital medicine and help give hospitalist programs financial stability and a brighter future.

“The way that hospitalists are going to realize fair pay is to go after Medicare Part A money, or monies that go to the hospital,” Dr. Whitcomb says. He suggests that hospitalist programs “join themselves at the hip” with their hospital to help it enhance its revenue stream “and the program’s reputation.

“As more and more money is put at risk and hospitals need to demonstrate quality,” Dr. Whitcomb explains, “it’s a perfect opportunity for hospitalists to plug into that revenue stream in a fair way,” one that helps the hospitals and the hospitalist program.

Edward Doyle is Editor of Today’s Hospitalist.

Next month: Strategies to build a pay-for-performance program.