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Pay for Performance in Health Care: Methods and Approaches Pay for Performance in Health Care: Methods and Approaches EDITED BY Jerry Cromwell, Michael G. Trisolini, Gregory C. Pope, Janet B. Mitchell, and Leslie M. Greenwald Pay for Performance in Health Care: Methods and Approaches Edited by Jerry Cromwell, Michael G. Trisolini, Gregory C. Pope, Janet B. Mitchell, and Leslie M. Greenwald March 2011 RTI Press ©2011 Research Triangle Institute. RTI International is The RTI Press mission is to disseminate a registered trademark and a trade name of Research information about RTI research, analytic Triangle Institute. The RTI logo is a registered tools, and technical expertise to a national trademark of Research Triangle Institute. and international audience. RTI Press publications are peer-reviewed by at least This work is distributed under the two independent substantive experts and terms of a Creative Commons one or more Press editors. Attribution-NonCommercial-NoDerivatives 4.0 license (CC BY-NC-ND), a copy of which is available at RTI International is an independent, https://creativecommons.org/licenses/by-nc-nd/4.0 nonprofit research institute dedicated /legalcode. to improving the human condition. We combine scientific rigor and technical Library of Congress Control Number: 2011921923 expertise in social and laboratory ISBN 978-1-934831-04-5 sciences, engineering, and international https://doi.org/10.3768/rtipress.2011.bk.0002.1103 development to deliver solutions to the www.rti.org/rtipress critical needs of clients worldwide. This publication is part of the RTI Press Book series. RTI International 3040 Cornwallis Road, PO Box 12194, Research Triangle Park, NC 27709-2194 USA [email protected] www.rti.org Contents Acknowledgments v Contributors vi Abbreviations and Acronyms vii Introduction 1 Janet B. Mitchell Chapter 1. Introduction to Pay for Performance 7 Michael G. Trisolini Chapter 2. Overview of Pay for Performance Models and Issues 33 Gregory C. Pope Chapter 3. Theoretical Perspectives on Pay for Performance 77 Michael G. Trisolini Chapter 4. Quality Measures for Pay for Performance 99 Michael G. Trisolini Chapter 5. Incorporating Efficiency Measures into Pay for Performance 139 John Kautter Chapter 6. Who Gets the Payment Under Pay for Performance? 161 Leslie M. Greenwald Chapter 7. Attributing Patients to Physicians for Pay for Performance 181 Gregory C. Pope Chapter 8. Financial Gains and Risks in Pay for Performance Bonus Algorithms 203 Jerry Cromwell Chapter 9. Overview of Selected Medicare Pay for Performance Demonstrations 221 Leslie M. Greenwald iv Chapter 10. Evaluating Pay for Performance Interventions 267 Jerry Cromwell and Kevin W. Smith Chapter 11. Converting Successful Medicare Demonstrations into National Programs 315 Leslie M. Greenwald Chapter 12. Conclusions: Planning for Second-Generation Pay for Performance 341 Michael G. Trisolini, Jerry Cromwell, and Gregory C. Pope Index 371 v Acknowledgments The authors would like to thank the many editors, reviewers, and document preparation specialists who contributed to the development of this book. They include Kathleen Lohr, PhD, who was the RTI Press editor-in-chief when this book was written; she provided extensive comments on each chapter and advice on layout, cover design, and many other details of writing and production. Karen Lauterbach, RTI Press managing editor, provided detailed advice and comments on editing, layout, and production, and kept the many components of the overall process moving steadily forward. Anne Gering and Carol Offen provided detailed edits for each chapter and managed the process of moving each chapter through writing, editing, and production. Joanne Studders and Sonja Douglas provided detailed final reviews and edits for each chapter, and prepared the final layouts. We would also like to thank the many anonymous reviewers who provided valuable comments and suggestions for each of the chapters when they were in earlier versions. vi Contributors Jerry Cromwell, PhD, is an RTI Senior Janet B. Mitchell, PhD, heads RTI’s Social Fellow in Health Economics. In the past Policy, Health, and Economics Research 40 years, he has participated in more unit. She received her doctorate from the than 75 federally funded evaluations Heller School at Brandeis University in 1976. and technical analyses of health care She has studied physician payment under payment reforms, including Medicare’s Medicare and Medicaid for many years and hospital prospective payment system, conducted the seminal work on bundling the physician fee schedule, anesthesia inpatient physician services (physician payment, disease management programs, diagnosis-related groups). and federal-state Medicaid cost sharing. Gregory C. Pope, MS, directs RTI’s Health He also is an adjunct professor in the Care Financing and Payment program. Mr. University of Massachusetts’s College Pope is a health economist whose primary of Nursing, where he teaches health research interest is health plan and provider economics, finance, secondary data payment in the US Medicare program, analysis, and cost-effectiveness analysis. including pay for performance, accountable Leslie M. Greenwald, PhD, is a care organizations, and risk adjustment. principal scientist at RTI International. Kevin W. Smith, MA, is a senior health Her research interests include Medicare research analyst in RTI’s Health Care Quality program policy, health care costs and and Outcomes Group. His research interests payment, managed care, and health care include evaluation research, quality-of-life reform. Dr. Greenwald received a BA measurement, psychometric assessment, from Dartmouth College and an MPA structural equation modeling, and survey and PhD from the University of Virginia. methodology. Mr. Smith received a BA from John Kautter, PhD, is a senior Colgate University and an MA from Tufts economist at RTI International. University. His research interests include the Michael G. Trisolini, PhD, MBA, is the development, implementation, and director of RTI International’s Heath evaluation of health care payment Care Quality and Outcomes Program. models, including payment models for Dr. Trisolini has more than 27 years of fee-for-service and managed care, as well experience in health services research as hybrid payment models. Dr. Kautter and management. His research focuses received his doctorate in economics from on quality-of-care measurement, the University of Illinois at Urbana- quality improvement programs, pay for Champaign, where he specialized performance, value-based purchasing, in health economics, industrial and health information technology. He organization, and applied statistics. has a BA from Oberlin College, an MBA from Harvard University, and a PhD from Brandeis University. vii Abbreviations and Acronyms ACE acute care episode ACO accountable care organization ACSC ambulatory care sensitive condition ADL activity of daily living AHRQ Agency for Healthcare Research and Quality (formerly known as the Agency for Health Care Policy and Research) ALOS average length of stay AMA American Medical Association AMI acute myocardial infarction APR-DRG all-payer refined diagnosis-related group CAD coronary artery disease CAMC Charleston Area Medical Center CBO Congressional Budget Office CHF congestive heart failure CMHCB Care Management for High-Cost Beneficiaries CMO care management organization CMS Centers for Medicare & Medicaid Services CoE Center of Excellence COPD chronic obstructive pulmonary disease CPOE computerized physician order entry CPPI California Physician Performance Initiative CPT Current Procedural Terminology CPTD Cancer Prevention and Treatment Demonstration CQI continuous quality improvement CT computed tomography DEA data envelopment analysis DHHS Department of Health and Human Services viii Abbreviations and Acronyms D-in-D differences-in-differences DM disease management DRA Deficit Reduction Act of 2005 DRG diagnosis-related group EDSS Extended Disability Status Scale EHR electronic health record EMR electronic medical record ESRD end-stage renal disease FFS fee-for-service FIM Functional Independence Measure GDP gross domestic product HAC hospital-acquired condition HbA1c glycosylated hemoglobin HCC Hierarchical Condition Category HEDIS Healthcare Effectiveness Data and Information Set (as of 2007); Health Plan Employer Data and Information Set (in use 1993−2007) HIE health information exchange HIPAA Health Insurance Portability and Accountability Act HMO health maintenance organization HQA Hospital Quality Alliance HQID (Premier) Hospital Quality Incentive Demonstration HVBPP Hospital Value-Based Purchasing Program IADL instrumental activity of daily living ICD-9 International Classification of Diseases, Ninth Revision ICER incremental cost-effectiveness ratio ICU intensive care unit IDS integrated delivery system IHA Integrated Healthcare Association Abbreviations and Acronyms ix IHIE Indiana Health Information Exchange IOM Institute of Medicine IT information technology ITT intent-to-treat LL lower limit MCCD Medicare Coordinated Care Demonstration MCPT maximum percentage eligible for bonus MCS Mental Component Summary MedPAC Medicare Payment Advisory Commission MFIS Modified Fatigue Impact Scale MHQP Massachusetts Health Quality Partners MHS Medicare Health Support MHSO Medicare Health Support Organization MMA Medicare Modernization Act MRI magnetic resonance imaging MS multiple sclerosis MSA metropolitan statistical area MS-DRG Medicare severity diagnosis-related group MSQLI Multiple Sclerosis Quality of Life Inventory MSSP Medicare Shared
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