Pay for Performance (P4P), Large Physician Groups and Accountable Care Organizations. Insights from Behavioral Economics

MEMORANDUM

To: Sr. VP and Chief Financial Officer, Health Insurance Operations

From: VP, Network Provider Relations, Health Insurance Operations

Re: Provider Pay for Performance "P4P"

Thank you for so repeatedly sharing your insights about our provider pay-for-performance programs ("P4P"). My staff truly appreciate the energy and passion that's been reflected in your many emails and voice mails in which you've vigorously contrasted our modest quality outcomes with the millions of dollars in additional expense that has gone to out to our contracted providers. Like you, we continue to seek better understanding about the role of this important initiative in mitigating our company's continued unfavorable cost trends, especially since this is on the Agenda of an upcoming Board of Directors meeting.

Since we've agreed that there may be one more opportunity to continue P4P, please allow me to share some important insights I've gained thanks to the Disease Management Care Blog. I highly recommend that healthcare leaders such as yourself receive regular doses of DMCB, since scientific studes have shown it can reduce the size of throbbing forehead veins, which has been a concern for you.

Thanks to the DMCB, we now know about this hot off the presses American Journal of Managed Care article titled "Using the Lessons of Behavioral Economics to Design More Effective Pay-for-Performance Programs" by Ateev Mehrotra, Melony Sorbero and Cheryl Damberg. This is an important manuscript, not only because it can help us better incent physicians, but because it also gives some insights about how physician groups and Accountable Care Organizations (ACOs) can screw this up.

First: the lessons:

1. Divide the incentives rather than a single lump payment: repeated payments have more appeal than single ones.

2. Tier the performance thresholds: everyone should have a goal and a reward that's within reach.

3. Reward the providers right away: a lag-time can undermine the priority of today's performance measures versus other concerns.

4. Witholds are bad: it can annoy docs, who are already grouchy. It you must do this, try a "deposit contract."

5. Keep it simple: otherwise, complex decisions will make persons risk averse. Contrast shared savings or quartile scoring with say, simply paying a bonus for every A1c that's ordered.

6. Make it stand alone: it shouldn't be mixed up with other forms of reimbursement, which could dilute its impact

7. "In kind" rewards can work: a "splurge" is more enjoyable than a check.

This is why our Provider Relations personnel have been concerned about the terms of our P4P programs with our larger physician groups. As you are aware, these groups tend to demand that any P4P from our insurance company go to the group and not their individual physicians.

They claim that it is difficult for us to accurately credit their individual physicians, that the group is ultimately responsible for performance improvements and that we can "trust" them. Yet, we believe we have a stake in assuring the physicians are fully and personally rewarded and suspect the group is diverting money toward other capital projects. What's more, every single of the lessons described above are routinely ignored by the large groups.

Which has important implications for ACOs. As we've noted before, there is a long history of physician-hospital distrust. That alone should give pause to the notion of funneling P4P to a hospital dominated organization without careful assurances that the P4P is flowing to where it is intended.

Once again, I want to thank you for your interest in shaping our P4P programs so that our enrollees can achieve the greatest benefit possible. It is clear the science of P4P is still in evolution and your support will be greatly appreciated going forward.

Value Based Insurance Design and the Synergies with the Medical Home, P4P, HIT and Disease Management. We've Only Just Begun

More than a year ago, the Disease Management Care Blog posted a prediction. It said that the key to achieving improved population-based outcomes at lower cost will lie in the combined five-fold synergies of: 1) Ver 2.0 care/disease management, 2) the patient centered medical home (PCMH), 3) provider pay-for-performance (P4P), 4) the electronic medical record (EMR) and 5) consumer directed health plans. It turns out that the DMCB was slightly wrong in several domains. It's not necessarily just 'pay for performance' but flexible provider compensation that includes enhanced fee-for-service, risk-adjusted capitation, P4P and gain sharing. It's not just the EMR, but EHRs plus decision support and registries. And it's not consumer directed health plans but value based insurance designs (VBID).

What is VBID? It's any commercial insurance product that includes adjustments of patients' out-of-pocket costs and provider reimbursement for specific services based on their clinical benefit. The greater the benefit to the patient, the lower that patient's cost share and the higher the provider payment. It can be tailored to certain services (for example, lipid testing) and/or for certain conditions (diabetes mellitus) and/or condition severity (enrollees with recurrent hospitalizations) and/or level of participation (in care management). It's not necessarily easy to implement, since there are Federal and State regulations to consider, the possibility of employee push-back over perceptions of unfairness, a still evolving business model and questionable scalability across a network.

You can read more about it here and view this helpful YouTube video here.

VBID was an important topic that was discussed by Mark Fendrick at the Patient Centered Primary Care Collaborative Stakeholder's meeting that was held in Washington DC on March 30. His presentation (the PowerPoint is not yet available on line) was timed to match the release of this PCPCC white paper. It's worth downloading and reading. It describes in some detail how the PCMH and VBID can be integrated through reduced patient out-of-pocket expenses for medical home-based visits as well as for referrals coordinated by the medical home, increased health reimbursement/savings accounts to pay for medical home services and co-pay tiering that favors testing and medications ordered by medical home team members.

The March 30 meeting also featured Dr. Blumenthal of ONC, who spoke rather extensively about the synergies of health information technology (HIT) and the medical home. Unlike discussion of VBID, however, there was little else that was particularly new in this discussion, including the assertion that this time, and we really REALLY mean it this time, that "meaningful use" combined with luster of federal funding will cause all those hold-out physicians relent and spend tens of thousands on an outpatient EHR.

What was missing from both Dr. Fendrick's and Blumenthal's presentations, however, was how HIT, VBID and the medical home are probably more than the sum of any of its parts. For example, HIT-based decision support tapping into registries can help prompt value-based interventions coordinated by PCMH team members even if the patient is not physically present.

The DMCB says toss in the right kind of provider reimbursements and the option of distance telephonic support to help coach the patient using principles of shared decision making and....

Well, the DMCB thinks anyone can see the potential here.

Years ago, the DMCB also submitted a paper to Health Affairs on the topic of an overlapping and mutually supportive five-way approach to population-based care. After some tantalizing positive reviewer feedback and requests for revisions, it was ultimately rejected. The thinks it was ahead of its time. The manuscript is in some folder in the DMCB World Headquarters somewhere. Maybe it's getting time to dust it off.

And maybe at a next PCPCC confab, it'll be realized that PCMH-VBID or PCMH-HIT dyads are only the beginning.

For LifeMasters, Nothing Succeeds Like Success.

Here’s an update to a prior post about LifeMasters’ ongoing telephonically-based 11 county Florida disease management pilot program for dually eligible Medicaid beneficiaries with heart failure alone or with coronary artery disease and diabetes. As readers may recall, compared to a control group, there were enough savings to warrant CMS continuing the program. The bottom line intervention vs. control per member per month (PMPM) difference has not been reported yet, but we do know that most of the savings to date appeared to be associated with patients that were successfully engaged by the coach-nurses. As a result, LifeMasters has redoubled its efforts to reach even more patients and enroll enroll enroll. If successful, LifeMasters will deserve credit credit credit and CMS will undoubtedly look to expand the program.

According to a January 29 press release, the push to enroll now includes a ‘Health Network One’ (HN1) physician bounty or a ‘per-member per-month fee for each patient engaged in the program with incremental increases the longer the participant remains in the program.’ HN1 is described here as a Florida company that maintains provider networks for the insurance industry; the Disease Management Care Blog suspects these are private physician practices that rely on HN1 to handle the myriad details behind contracting and credentialing with health insurers. Getting some coin from LifeMasters is one of those details. This is classic win-win: the docs get income and greater buy-in with an otherwise distant vendor, while LifeMasters knows each enrolled patient – thanks to a physician referral - increases the likelihood of success for an already successful program.

The DMCB thinks this is important because of its prediction that disease management, the medical home, pay for performance, insurance benefit design and information technology will continue to evolve to a mutually supportive interlocking Unified Field (or maybe a Teilard de Chardin-esque ‘Omega Point’) of population-based care that collectively make up for the weaknesses of the individual components. We’re already witnessing interest in combined disease management – patient centered medical home approaches, benefit designs that lower barriers to self-care and the use of P4P to support the purchase of EHRs. This is one more example of this trend by a nimble disease management organization taking advantage of the synergies with other population-based care initiatives.

The DMCB suspects the next stage (unless it’s already arrived) will be three-way combinations, such as disease management organizations using P4P to support the medical home or consumer directed health plans that have first dollar coverage of services arranged by medical homes using an electronic record. Then will come 4 and then 5. Interested in knowing which will be the leading disease management vendor in the coming years? One way to do this is look for the program that successfully incorporates all of these concepts.

While LifeMasters and CMS deserve credit, this is ultimately research that is testing an model that is already underway in other settings. That being said, it's clear to most population program architects that, in an open-range, fee-for-service setting, it’s important to get the physicians involved. This is an attractive way to do that, especially if it’s combined with additional IT initiatives like this one and if the physician compensation is tiered and additive. The DMCB knows this because LifeMasters was kind enough to answer an email question about that from the DCMB.

One lingering question remains however: what happens to all that that pay? In an ideal setting, it should be plowed back into the office practice to support even better systems that result in even better performance for even greater pay leading to a virtuous cycle of escalating outcomes. The DMCB suspects that in large salaried physician practices, not all the money makes it to the docs' paychecks. Yet, instead of hiring more personnel or hardware to help garner better performance, the temptation is to use the performance-based revenue for something with an even better ROI - like an ultrasound machine or something. Not that the alternative of diverting all of the money directly to the physicians' pocket is any better. That could happen in an HN1 type of network.

We'll see. In the meantime, the DMCB recommends that disease management programs that get into the P4P arena follow the money.... carefully.

P4P, Disease Management, the Medical Home, Electronic Records and Consumer Directed Plans: The Unified Field Theory of Population Health

The Disease Management Care Blog checked out a publication from the Journal of Medical Practice Management authored by Charles Peck MD, the Chief Medical Officer of LifeMasters. He argues that usual pay-for-performance programs (P4P) are more trouble than they are worth to busy physicians because of burdensome data collection. Enter disease management organizations (DMOs). Dr Peck argues they’re ready to be “partners” and help busy physicians get ahead of the curve. DMOs can not only achieve outcomes, they can help get them documented. Unfortunately this particular article is light on specifics. It doesn’t describe how LifeMasters does/would do it and offers no examples.

Interested in more detail on how this might work? One example is what McKesson is doing in the DMCB's home state. It is contracted to provide disease management services for fee-for-service Medicaid enrollees in Pennsylvania. According to this press release, a Mercer audit confirmed there was a net savings of $35.9 million over the course of one year. While this press release doesn’t mention it, the McKesson program not only deploys the usual distance telephonic patient coaching, but also compensates physicians with a version of P4P for the work of referrals, recruitment and follow-up.

The DMCB wishes, however, that the methods and results from this program be detailed in a peer-reviewed forum. No disrespect to the folks from Mercer, but let's face it: it’s hard to know what’s going on here. Without kicking the scientific rigor and transparency up a notch, the DM industry will continue to be disdained as black-box voodoo by policy makers. While we're thinking about that, here's another option to think about.

Never mind that, though. Think disease management combined with the medical home.... Medical home sycophants have suggested it can be supported with P4P..... Both disease management and the medical home rely on information technology, registries, decision support and electronic record keeping..... Now we see disease management and P4P.

See a pattern?

The Disease Management Care Blog does also. It continues to be interested in a unified field theory of population management. This view suggests disease management, the medical home, pay for performance, the electronic medical record and even variations of consumer directed health plans can be not only integrated into mutually supportive programs, but combined in a single approach to care. Doing so will make up for the weaknesses of the other. Is this another opportunity for the DMO community to show some leadership?

Sounds good conceptually, but writing it up, keeping it less to 5000 works and getting it published somewhere has turned out to be a daunting challenge. The DMCB continues to work on the manuscript. We’ll see.

No Silver Bullets, Lots of Shortcomings

Goodness gracious. If you think you have a good idea when it comes to solving the twin dilemmas of cost and a quality for chronic conditions, ‘tis the political season. While the Disease Management Care Blog thinks the short term prognosis for meaningful health care reform is poor, that doesn’t mean it’s not smart to get your proposal out there and on the table in the next 85 days. Just in case.

As a public service, the DMCB would like to offer these two Rules for Promoting Your Good Chronic Condition Care Idea:

1. Cast It As A Leading Domestic Policy ‘Silver Bullet.’ Yes, we know chronic illness care is an impossibly obscure tangle of insatiable demand, State and federal regulations, complex actuarial principles, relentless demographics, burgeoning technology and county-by-country variation. That complexity combined with an impatient hunger for reform is the perfect setting for the simplistic Good Idea that offers to cut through the clutter. For examples outside the health policy sphere, think ‘school vouchers,’ ‘flat tax’ or being willing to ‘take a paternity test.’

Examples of Chronic Care Silver Bullets: The electronic medical/health/personal record, pay for performance, single payer system, disease management, health savings accounts, patient centered medical home and an individual insurance market.

2. Do Not Mention Shortcomings (other than cost): Not only will you tarnish the Good Idea and diminish its chance of adoption, we all have a limited attention span that is simply unable to tolerate it. It is OK, however, to mention the cost of [insert a number from 1-100 here] [insert prefix of bil, tril or gazil here] lion dollars because we’ve become used to similar-sounding amounts being spent on Iraq, mortgage lenders and botox.

Examples of shortcoming to not mention: that electronic records can introduce new types of errors, P4P can incent processes not outcomes, single payer systems are notoriously difficult to modify, disease management may not work for all populations, ‘cost sharing’ may really mean ‘cost transfer,’ patient centered medical homes are being piloted (research), not adopted (covered by insurers), many persons with chronic illness are uninsurable and that cost effectiveness studies rely on unfamiliar concepts like QALYs. Mention these and your Silver Bullet will be tarnished.

Examples of excellent SBNS (Silver Bullet, No Shortcomings) rhetoric (italics mine):

From the McCain campaign:

'By emphasizing…..the use of information technology, we can reduce health care costs.'

‘Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts’

‘Families should be able to purchase health insurance nationwide, across state lines.’

And in the cost is no object category:

‘…establish a nonprofit corporation that would contract with insurers to cover patients who have been denied insurance and could join with other state plans to enlarge pools and lower overhead costs.’

And from the Obama campaign:

‘Support disease management programs. Seventy five percent of total health care dollars are spent on patients with one or more chronic conditions, such as diabetes, heart disease and high blood pressure.’

‘Providers….will be rewarded for achieving performance thresholds on outcome measures.’

‘…establish an independent institute to guide reviews and research on comparative effectiveness.’

And in the insert number, insert prefix category:

invest $10 billion a year over the next five years to move the U.S. health care system to broad adoption of standards-based electronic health information systems, including electronic health records

The DMCB Comments About Comparative Effectiveness Research, Payment for Quality, Measuring Resource Use & Physician Payment

The Disease Management Care Blog participated in an interview about some of The Big Medical Questions Of Our Time and, in typical media fashion, adhered to a superficial‘ drive-by shooting’ approach in its responses. This is less about accuracy or thoroughness but more about covering as wide an area as possible and then exiting quickly. So here’s the short and sweet of it:

What is the role of Comparative Effectiveness Research?

It’s suitable for drugs, devices and relatively circumscribed medical interventions. In the CER universe, an academic/research medical-industrial complex approach of head-to-head randomized clinical trials will be a virtue. That’s fine, but the DMCB doubts complex ‘packages’ of interventions that are interdependent and synergistic (like the Medical Home or Disease Management) lend themselves too well to prospective trials because they are hard to randomize, hard to blind, difficult to shield from other sources of bias and certainly hard to pay for.

The key question for readers of the DMCB: If CER determines there is no evidence that an intervention “works,” should that result in 1) no payment, because there is no evidence, or 2) payment until there is evidence that something else works better?

What is the role of Linking Payment to Quality?

While this has yet to really be applied to physicians, in order to discern levels of clinical quality ('high,' warranting payment, versus 'low,' warranting non-payment), the ‘law of large numbers’ requires that a valid statistical sample be used. Most individual physicians in most practice settings don’t have sufficient numbers of patients with a condition in which quality can be confidently assessed. This is an insurmountable problem, unless the solution is “close” is good enough. By the way, even if a sufficiently large sample becomes available, a p value of .05, means 5% of the payments are probably in error.

The key question for readers of the DMCB: A common solution is to aggregate physicians’ data and let the physicians distribute the payment. Is this a conscious or unconscious early step in the aggregation of physicians into groups, PHOs, accountable health systems or integrated health systems – and the demise of the small independent practice?

What is the role of Measuring Resource Use?

Since the subsequent use of resources (back imaging studies and a visit to a specialist or hospital) following an index encounter (the first visit for back pain) is part of the resource consumption, most measures of resource use rely on ‘episodes of care,” which the DMCB thinks of as a packaged timeline with a start (index visit) and a finish (resolution of the condition). The good news is that otherwise independent providers involved in the episode of care can have a stake in optimizing resource use. The measures, if done right, can get them to cooperate and integrate.

The key question for readers of the DMCB: Is measuring resource use around an episode of care the first step in a road that will lead to paying for episodes of care, using a payment mechanism similar to capitation?

What is the role of Medicare Payment Updates from the RUC?

Mainstream primary care physicians are confused by the RVU methodologies, disenchanted with the competing specialties in the process, distrustful of the politics surrounding them and disdainful with the RVU conversion to dollars and payment. While policy, economic and physician experts are grappling over tenths of an RVU, the street level PCPs have become disengaged.

The key question for readers of the DMCB: While us do-gooders in the population-health biz have GREAT ideas on how to make life better for physicians and their patients, why should docs, given their experience with RVUs (and capitation and P4P) believe that we aren’t offering more disappointment?

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Off topic, but DMCB is having an 'egads, what were you thinking!?' moment over the bad Gator behavior of young and future physicians. A study from the Journal of General Internal Medicine:

Abstract

Aim To measure the frequency and content of online social networking among medical students and residents.

Methods Using the online network Facebook, we evaluated online profiles of all medical students (n = 501) and residents (n = 312) at the University of Florida, Gainesville. Objective measures included the existence of a profile, whether it was made private, and any personally identifiable information. Subjective outcomes included photographic content, affiliated social groups, and personal information not generally disclosed in a doctor–patient encounter.

Results Social networking with Facebook is common among medical trainees, with 44.5% having an account. Medical students used it frequently (64.3%) and residents less frequently (12.8%, p < .0001). The majority of accounts (83.3%) listed at least 1 form of personally identifiable information, only a third (37.5%) were made private, and some accounts displayed potentially unprofessional material. There was a significant decline in utilization of Facebook as trainees approached medical or residency graduation (first year as referent, years 3 and 4, p < .05).

Discussion While social networking in medical trainees is common in the current culture of emerging professionals, a majority of users allow anyone to view their profile. With a significant proportion having subjectively inappropriate content, ACGME competencies in professionalism must include instruction on the intersection of personal and professional identities.

According to MSNBC:

'Erick W. Black, one of the researchers, said he found pictures of students grabbing their breasts and crotches, posing with a dead raccoon and multiple photos of residents and medical students drinking heavily.

Many students had joined Facebook groups that could be considered sexist, racist or downright nasty, with many using vulgar language. Some of the tamer groups included 'Physicians looking for trophy wives in training' and 'PIMP' (Party of Important Male Physicians).''

The DMCB asks if instruction in the use of common sense might also be in order. DMCB spouse opines 'they should not be allowed to graduate!'

Patient Centered Medical Care and Disease Management Both Let Doctors Be... Doctors

The Disease Management Care Blog doesn’t remember too much about its 7 years of medical school or residency (thank goodness) but it remembers when it left Preventastan and crossed into Acuteastan. It was close to midnight and one of my fellow interns was drawing up a gram of Solumedrol for an I.V. ‘push’ dose for an unfortunate with Lupus nephritis. I thought, how cool.

It is difficult to overestimate the mostly good and sometimes bad influence of medical training on attitude, values and career choices. One of the most pervasive outcomes of med school and residency however, is the enculturation of young trainees toward an acute care focus. We become addicted to the thrill of spotting a diagnosis and tailoring a successful treatment. That’s not necessarily bad: physicians are needed first and foremost to care for sick patients. After many rewarding years of helping patients in extremis, prevention - the art and science of non-events - is, well, so boring.

This contrast between chronic care ennui and acute care excitement has gone unexamined as one cause of the widespread lapses in health care quality. But the DMCB thinks it is out there.

By ‘prevention,’ the DMCB includes not only the avoidance of disease but the complications of established chronic disease. Getting docs to enter Preventastan is hard work. There have been unsuccessful efforts to advance prevention with quality improvement (QI), the electronic medical/health record and pay for performance (P4P). There is literature that suggests these interventions have a spotty record in changing the approach of hardened professionals. They are openly skeptical about QI, willing to ignore electronic on-screen prompts and resist P4P.

The DMCB appreciates there are other forces at play. Physicians lack time, trust in the system, training, incentives and support. On the other hand, when physicians really want to effect change, it appears they have the means to do so.

This is why the DMCB likes the Patient Centered Medical Home (PCMH) and Disease Management (DM). Both approaches explicitly recognize the physician doesn’t need to be personally responsible for preventive care. PCMH delegates chronic care to members of the clinic’s team while DM outsources it to remote nurses. Some combination of both probably works best.

What’s more both PCMH and CM approaches can be helped by quality improvement, rely on the electronic record and can generate payment for performance.

And finally, both let doctors be …. doctors.

What are Some of the Ingredients that the Disease Management Industry Could Use to Build Alliances with Physicians?

In the previous post, the Disease Management Care Blog speculated that physician antipathy for disease management was unlikely to be assuaged by new science from more peer review publications. While disease management organizations point to high provider support in their own internal surveys, few can deny that there is lingering deep-seated hostility in many corners of the physician community. The DMCB suspects much of this has to do with the dislike of anything to do with managed care, being within the blow-back ‘blast radius’ from anger over the decline in physician income and prestige as well as lingering annoyance over handsome fees commanded by disease management organizations for providing services that have been excluded from physicians’ fee schedules.

While not immediately germane, check out this article from today’s Wall Street Journal. This has to do with the pharmacy benefit managers’ eternal battle to promote generics, but there are lessons to be learned from Express Scripts’ multiple interdependent interventions based on insights gleaned from understanding the story behind the story in multiple market segments. The disease management industry may require a similar effort.

Of course, one alternative approach is to mimic the posture of many managed care organizations. This strategy – despite shocked, SHOCKED public protestations to the contrary - means privately calculating that a cozy relationship with the providers is unattainable. Why not? They’re not the source of the revenue and there will always be a tension between the payers on one side and the physicians on the other. Accordingly, being in that ‘space’ means having to take sides and sometimes getting beat-up.

The DMCB disagrees. Absent a really good physician survey that helps us understand just what is going on, the DMCB is going to continue in the tradition of many health care bloggers and express an informed, if unsubstantiated, opinion. It believes there is much that can be done.

Despite the apparent anger out there, many disease management organizations have documented that there is good will in many segments of the provider community. That’s a start. Other segments can be constructively engaged if there is a multidimensional effort that includes, but is not limited to:

A better understanding of the physician ‘market’ segments and their unique perspectives. Who is angry? Where? Why? What can be done? In the opinion of the DMCB, they are evolving into a whole new genus and species compared to their other medical brethren. It’s time to understand that dynamic and what it means to building alliances within the industry’s existing and future business models.

Not waiting for more information on the crisis among primary care providers. If the disease management industry is as allied with these physicians as they say they are, they should know that they are struggling. They could use widespread, repeated, visible and credible support now.

Getting into the “Pay4” arena – big time - with meaningful reimbursement. Cash is always a sweetener, but it’s time to monetize physician participation and program referrals. Note that ‘meaningful’ will need to be defined by the physicians. It will cost, but if patient engagement rates increase, it will be well worth the investment.

Explicit support for the 'Advanced Medical Home' and/or the 'Chronic Care Model.' This will build alliances in policy circles. What’s more, it’s in the interest of disease management organizations to have this resource available to them in their networks. Why not outsource complex care management for appropriate patients that have access to a medical home? By the way, the cash will help generate good will and get patients the right care at the right time.

If anyone has other ideas, please share.

By the way, the DMCB is reminded that many persons in the industry are inveterate party animals. Yet, their travels often result in their becoming victims of the dreaded syndrome of mid-sized city-induced road warrior ennui. As another service to the loyal readers trapped in hotels everywhere, the DMCB has found a solution: fire up that built-in cam in your lap top, don some dark sunglasses and get virtually down!

The Disease Management Care Blog Speaks About Pay for Performance (P4P)

Readers of the Disease Management Care Blog may recall the scrolling 'Check It Out' 'ABQAURP' icon that was posted on the right. It’s been taken down because the April 5 Chicago conference is over. Listening to the other speakers was a wonderful learning experience and I hope to be sharing some of their insights later on this week.

It was my privilege to talk on the topics of physician measurement and pay for performance (P4P). In no particular order, here is a bulleted summary of some of the points I made.

• Lay-consumers have trouble understanding why physicians need to be paid to do the right thing.

• An underlying value proposition for P4P and quality is that it mostly decreases costs. Unfortunately, that remains an unproven assumption in many domains of chronic care and wellness.

• While the ‘pay’ in P4P from a payor perspective amounts to millions of dollars, for the physicians it typically results in hundreds of dollars. Most physicians I talk to feel that is not enough.

• Yet, while P4P has the potential to get real dollars to the physicians, its real value is that it prompts physician engagement, a measurement culture and the creation of ‘systems’ of care.

• The same measurement processes that support P4P are inevitably used to array physicians by cost and quality, which inevitably leads to restricted networks. That means winners and losers and, apparently, the involvement of State Attorney Generals.
  

• Much of the scientific literature indicates most of today’s versions of the electronic health record do not necessarily save money or improve quality. It is clear is that they disrupt workflow, enable upcoding and may facilitate gaming. Their presence alone is not necessarily performance and does not warrant payment.

• If we are going to base P4P on short term process or intermediary outcomes, ACCORD (A1c) ENHANCE (LDL) and Rosiglitazone (A1c) teach us that we better be sure about that those measures tell us what we think they tell us.

• P4P may be necessary, but is not sufficient, to promote physician behavior change.

Hospitals, P4P, Non-Payment of Medical Errors, Performance Guarantees and Disease Management

While the disease management care blog has been aghast at Dancing Priscilla’s botox overdose and egregiously bummed over Robert Plant’s decision to tour with Alison in lieu of Jimmy, at least it has a 2008 Yes Tour to look forward to. In the meantime, it will make do with CBS’ on-line streaming of March Madness, which includes a video player with “boss button.” Click it and a spreadsheet will cover your screen.

The DMCB thinks bosses should be pleased if their employees regularly log onto this web page, so no boss button is necessary. Read on, leave it up and be proud. In fact, forward the link to the big guy: you'll be thanked.

Speaking of CBS, it has another interesting bit of news video that describes a medication error involving the newborn Quaid twins. While the pharma's tone deafness in a separate video makes for creepy viewing, readers may be more interested the implications of what CBS offers up as one solution: hospital package pricing with “performance guarantees” for an the episode of care that extends beyond the initial hospitalization. If the patient needs to be readmitted, that cost is generally covered. For those readers interested in methodology, this has been described in one publication using a pre-post study design in a setting of dubious generalizability.

What’s more, the lack of detail makes the DMCB suspect performance guarantee contracting is actuarially neutral, i.e., priced to account for an expected rate of complications. That may be one reason there hasn’t been a stampede among health insurers to adopt the guarantee approach. Rather, they seem to prefer sticking to their pre-existing fee schedules and turning up the heat with more blunt approaches of carrots (P4P bonuses) and sticks (non-payment for medical errors).

The DMCB asks: who cares? Hospitals will need to improve their in-house care processes but that alone is not sufficient. There is considerable literature showing better patient preparation prior to an elective admission is important and that post-discharge planning often goes awry. Enter the disease management companies which can add value across a wide number of inpatient conditions and their associated episodes of care. For example, they have resources that may be of use prior to surgery in helping patients choose their best treatment options ahead of time, and they have a track record of reducing readmissions once patients are discharged. This may not apply to all conditions treated all ways in all hospitals in all settings, but there is some merit to this approach.

As the pressure grows to increase quality and avoid errors, hospitals may soon turn out to be another customer of disease management companies. In other words, in the opinion of the DMCB, these companies may be able to help secure the bonus, avoid the unnecessary readmission or fulfill the guarantee.

Pay for Performance (P4P) & Disease Management

In keeping with the season, the Disease Management Blog wanted to bracket this week with a famous bit of verse from the 4^th Chapter of Matthew:

The tempter came to him and said, "If you are the Son of God, tell these stones to become bread." Jesus answered, "It is written: 'Man does not live on bread alone, but on every word that comes from the mouth of God.”

At the time, most of the world was preoccupied getting enough to live on, not dying prematurely and securing as much power as possible. In dealing with these Three Great Temptations, this itinerant carpenter succinctly pointed out that mankind deserved better and that our greatest potential in every aspect of our day-to-day existence was built on something far greater.

Our effort to shape the delivery of health care is no different. I think the “bread alone” issue is what annoys many stakeholders about “pay for performance.” Patients wonder why physicians should be paid to “do the right thing,” while physicians distrust the use of pieces of silver to shape their profession. Both parties know "bread alone" falls short. As testimony to this, not too long ago I watched a respected colleague practically tear up a check at a Departmental meeting in disdainful disgust.

That’s why I was very interested in this telling videotape of Bob Margolis MD, the CEO of HealthCare Partners, discussing how P4P works in California. It’s about 40 minutes long and well worth watching. Kick back, get your lunch and enjoy.

It was not what you might expect. I thought Dr. Margolis was going to suggest that paying docs to do the right thing was bread enough. I was pleasantly surprised. Among his many excellent points is that paying docs to do the right this is all well and good, but more importantly:

• This is also a function of not paying for the wrong thing.

• The exercise in creating P4P generates measurement, which – independent of the bread - is a critical ingredient in the improvement of health care delivery.

• P4P draws stakeholders to the table and gets everyone to talk about quality.

• Because physician groups are large and many of the docs are salaried, they haven’t necessarily seen any increase in pay for their performance. Rather, the pay is used to invest in systems of care that promote performance. Important distinction.

The key lesson is that P4P may deliver more dollars to the doctors (since I'm a doc, the the disease management blog supports the idea), but when it's done right, it can be a catalyst that brings out other more important positive forces. I'm not necessarily saying this is a key to heaven, but there is something to be said for appealing to dimensions of health care that have nothing to do with self-interest.

As an aside, I’ll point out that the lessons are important for the disease management industry, which should also strive to live by more than bread alone. I’ll leave the broader dimensions of this to another blog, but at a more discreet level, check out McKesson’s AccessPlus P4P (more like Pay for Participation) for Medicaid in Pennsylvania (special attention to page 8). Just like the potential of a combined Medical Home-Disease Management approach, there may be merit to a combined P4P-Disease Management approach. McKesson deserves a lot of credit.

Or how about a P4P plus Medical Home plus Disease Management approach? Anyone know of any examples?