# Presentation: 426119

## The Role of Incentive Programs in Payment Reform

- Robert Mandel, MD
- Vice President, Health Care Services
- Blue Cross Blue Shield of Massachusetts
- August 5, 2008

- Blue Cross Blue Shield of Massachusetts is an Independent Licensee of the Blue Cross and Blue Shield Association

## From Our Promise to Transformation

*To always put our members’ health first.*
- The services our members receive are only as good as the health care system that delivers them.
- To support the passionate commitment of caregivers, we must collaborate to create a health care system that provides safe, timely, effective, efficient, equitable, patient-centered care for everyone in Massachusetts.

## Provider Reimbursement StrategyIntegrated Pay-for-Performance Programs

**Program**
**– ****Skilled Nursing **
**Facility**

**Behavioral Health **
**Fee Differential ****–** Outcomes Program
- Participation

- Provider Reimbursement Strategy*Integrated Pay-for-Performance Programs*

**Hospital Performance ****Incentive Program**
** **Hospital Quality
-  E-Technology** **

**Primary Care Physician**
**Incentive Program**

**Specialist Performance **
**Incentive Programs**
**– ****Group-based**
**– ****Specialty-based**

**Improved ****healthcare ****quality, access,**** affordability, and ****outcomes **

**Notes:**
(Description:  Venn diagram shows the BCBSMA Provider Reimbursement Strategy including five overlapping circles, each representing one of the current pay-for-performance programs – see labels – all of the programs are designed to lead to improved healthcare quality, access, affordability and patient outcomes.)

## Incentive Programs’ Results

- Paid out over $27 million in incentive payments to qualifying PCPs for their results in 2007, totaling over $151 Million since 2000
- In 2007, paid $98 million to 63 hospitals, representing 2.4% of an average hospital’s payments.
- Groups received a total payout of $15.9 million for 2007 performance; an average payout per group of $758,000

- All 2007 amounts include projected appeals.  * Most recent available data

## HEDIS® Performance on PCPIP Measures

***Boxes in blue reflect years the measure was in PCPIP***
*** Due to program changes 2007 HEDIS measure results were not calculated.**

**Notes:**
(Description: table showing the incentive program measures across the top and the performance on those measures from the inception of the program in 2000 through 2006. 2007 measure performance was not calculated due to changes in the program measures.)

## Performance Pays: Higher Quality, Lower CostsPremier Quality Demonstration Project

- Performance Pays: Higher Quality, Lower Costs*Premier Quality Demonstration Project*

**Notes:**
(Description: Slide shows multiple bar graphs of quality measures vs. costs from the CMS Premier Quality Demonstration Project. Each of the six graphs has three categories of performance on the horizontal axis - low, medium and high, as well as a cost scale on the left-vertical axis.  Each of the six graphs – covering the following areas – hospital costs for heart bypass surgery, hip replacement surgery, knee surgery, hospital costs for medical patients, hospital costs for surgical patients, and hospital costs for pneumonia patients – show the same results – low quality is most expensive (substantially more), medium quality is moderately expensive and the highest quality is in fact least expensive.)

## Performance Pays: Higher Quality, Lower CostsPremier Quality Demonstration Project

- Performance Pays: Higher Quality, Lower Costs*Premier Quality Demonstration Project*

**Notes:**
(Description: Slide shows multiple bar graphs of quality measures vs. costs from the CMS Premier Quality Demonstration Project. Each of the six graphs has three categories of performance on the horizontal axis - low, medium and high, as well as a cost scale on the left-vertical axis.  Each of the six graphs – covering the following areas – hospital costs for heart bypass surgery, hip replacement surgery, knee surgery, hospital costs for medical patients, hospital costs for surgical patients, and hospital costs for pneumonia patients – show the same results – low quality is most expensive (substantially more), medium quality is moderately expensive and the highest quality is in fact least expensive.)

## A New Approach – An Alternative Quality Contract

**Performance Drivers**
- Tie performance payments to achieving goals of quality, safety, efficiency, and patient-centeredness
- Work with patients to encourage the appropriate use of services

- To attempt to address these issues, we have begun to design an innovative alternative contracting model with these goals in mind

**Member Incentives**
- Create incentives that align with the end state objectives of improved quality and healthy behavior

**Plan Designs**
- Offer new plan designs that drive volume to high quality providers
- Provide transparent reporting about performance

**Quality & Total Cost**
- Provider payments focus on quality and total cost, decoupling volume and revenue
- Create opportunities for the implementation of alternate care delivery models (email, group visits, etc.) and other innovations

**Integration**
- Create a payment model which rewards for managing integration of care delivery across the continuum
- Create a model for providers to clinically and financially center on the patient

**Notes:**
(Description: image shows 5 stacked cubes – three on the bottom with two on the top – each cube has one of the 5 component categories shown within it. Include descriptions from text if necessary.)

## Performance Achievement Model

- An aggregate performance score is calculated based on the provider’s hospital and ambulatory quality to determine a percentage payout

- Example:

- An aggregate score of 3.0 would yield a 5% payout, which if applied to a global payment of $200 PMPM would yield an additional $10 PMPM for the provider

**Notes:**
(Description: the line graph shows the potential entity performance score on the horizontal axis with a scale – representing performance “gates” – showing levels 1 through 5.  The vertical axis shows the percentage of incentive payout at each performance gate. The scale begins at zero and reaches a maximum of 10%. The line graph shows begins at the number 1 gate and shows a percent incentive payout of 2%, gate 2 shows a payout of 3%, gate 3 – 5%, gate 4 – 9%, and gate 5 – 10%. The bulk of the incentive would be achieved through gate 4 with the top incentive being earned only when nearing the theoretical optimum performance.)

## Key Components Of The Alternative Quality Contract Model

- Key Components Of The Alternative Quality Contract Model

**Expanded Margin Opportunity**

**INITIAL GLOBAL PAYMENT LEVEL**

- Inflation

- Performance

- Initial global payment level based on health status adjusted regional network averages
- Inflation factor derived from CPI
- Providers benefit from this model by a) achieving high performance on quality and safety metrics and b) driving efficiencies while managing to a global payment level
- Customers benefit from this model due to more predictable and controlled trend
- Full payment of the incentive is based on achieving “Gate 5” performance on all measures in a given year
- Partial payment will be based on achieving performance levels along a continuum

- Efficiency Opportunity

- PEP-3184 (7/08)

**Notes:**
(Description: Bar graph shows one vertical bar - representing payments - for each of the 5 years of the contract. A dotted horizontal line across all bars/years indicates – along with the color of the base of the bar – the global payment level determined by the health status adjusted regional network average of their population. The performance level is shown on top of the base payment bar growing slowly over each year of the contract as entity performance improves – the green segment. In addition to the performance improvements each bar shows increases in payments annually after the first year, that would be indexed to the consumer price index – the yellow segment. Lastly, each bar shows an area of increasing gain for the entity, not by additional external payments, but by saving more of the global payment as administrative and other efficiencies are incorporated into the system – the dark blue segment.  Overall, the entity operating under the AQC is able to implement long-term programs to improve efficiency and enhance quality, can earn / keep monies associated with those successful efforts, as well as being able to remain financially stable in the face of inflationary pressures because of the annual CPI increases.)