Policy Forums

Pay for Value Executive Summary

Forum IV

June 18-19, 2007
Hanover, NH

Agenda
Participants

Sanne Magnan, M.D., Ph.D., Institute for Clinical Systems Improvement

Mayo Clinic Health Policy Center convened 47 leaders from across the country in Hanover, N.H., to discuss how to change payment systems to encourage high quality and cost-effective health care. The forum, co-hosted by the Center for the Evaluative Clinical Sciences at Dartmouth College, was in response to one of the major themes that emerged from Mayo Clinic's 2006 symposium — creating a payment system that reimburses for value. Participants agreed that the United States is not providing the highest quality care possible for the money spent, and noted several problems with the current payment system that must be addressed:

• There are disincentives for providing certain kinds of effective care (lower-cost services, "cognitive" care, preventive care) and incentives to offer expensive specialty care, procedures and repeat office visits.
• A huge amount of money is spent on end-of-life care that generally doesn't extend the lives of patients — and may even shorten them.
• Poorly coordinated care is widespread and has a negative impact on outcomes, safety and service, while increasing spending.
• Patients are poorly informed about health care choices and the evidence basis for treatment.

New Payment Approaches

During the meeting, group members representing many sectors — providers, health plans, employers, patient advocacy and academia — evaluated several innovative ways to pay for care. Overall, the group expressed very little support for the current Medicare pay-for-performance programs. For all other payment methods, however, there was considerable variability of opinion about how the individual option might affect health care costs and quality. In the end, attendees felt that the following three payment approaches — which aren't mutually exclusive — should be explored further.

Chronic Condition Coordination Payment

Patients with chronic conditions would choose a "medical home"
— a place with resources and infrastructure to organize and coordinate care over time — for their care management and preventive care. The medical home would receive a single periodic, prospectively defined "care management payment" to cover all of these services. The amount would be adjusted for the severity/risk of the patient. Major acute episodes and long-term care associated with the chronic condition would be paid separately.

• Advantages
  Participants thought that a "medical home" (which would be required to meet certain qualifications and publish outcomes) could potentially improve the quality of care and reduce waste associated with the lack of coordination that commonly characterizes chronic disease treatment. Several medical home pilots exist in Louisiana, Pennsylvania and California, and participants noted that hospice is a variation on this model.

• Challenges
  Patient advocates expressed interest in this payment mechanism as a way for the chronically ill to gain access to needed services, but cautioned that the system must provide patients with a substantial amount of trusted information prior to enrollment.

  Members of the group also emphasized that the medical community must conduct research to define validated clinical pathways — and the associated costs — to manage these patients over time.

Certification of Shared Decision-Making for Major Elective Surgery

Michael Morrow, Blue Cross Blue Shield of Minnesota; Jerome Grossman, M.D., Harvard; and Steve Lampkin, Wal-Mart

Medical centers would be compensated for establishing a formal program in which patients actively participate in making treatment decisions. All candidates for elective surgery would be offered the program. Medical centers with high-quality patient-decision scores would receive a bonus payment.

• Advantages
  Participants felt that this payment system would promote informed patient choice, and increase the quality of care while decreasing costs and waste. This model also could be expanded to other areas, such as use of drugs, and could be implemented now or in parallel with other payment systems. Surveys show that when patients have used quality decision aids, they have been highly satisfied (90 percent or more) with their care. Organized care groups would be best positioned to implement these tools.

• Challenges
  The group acknowledged that it could be difficult for providers to agree on quality measures for the decision guide, and wondered if implementing such a program would compound low provider job-satisfaction scores that exist across the nation.

  "Doctors are not very good diagnosticians of patients' preferences. Informed patient choice needs to become the standard of practice when there are several treatment options."
  
  –John Wennberg, M.D., MPH
  Center for the Evaluative Clinical Sciences at Dartmouth

  From an administrative perspective, participants noted that the payment system should address the discrepancies between procedural payments and payment for time spent on shared decision-making. They also recognized that implementing shared decision-making aids probably would reduce surgical rates, creating short-term financial issues for some providers.

Mini-capitation (Package Pricing)

This method provides a single bundled payment to hospitals and physicians managing the hospital care for patients with major acute episodes (heart attack, for example). One lump sum payment for both the physicians and hospital would encourage the two groups to work together to integrate services for patients. The length of the episode could include the hospitalization alone, or time periods before and after the inpatient visit.

• Advantages
  Participants pointed out that mini-capitations have been used for more than a decade to pay for transplants. The group felt that this payment strategy could help improve quality of care if the lump sum payment required providers to publicly display pertinent quality measures. Bundling the top ten diagnosis related groups (DRGs) by cost and quality could be a starting point for implementation.

• Challenges
  Some participants pointed out that mini-capitation could give providers more negotiating power with insurance companies and may inadvertently drive up costs.

Principles for Payment Reform

Bruce Hamory, M.D., Geisinger Health System

The Dartmouth participants advocated the following principles to guide the design of these new payment systems:

• Develop appropriate results-driven outcome measures around medical conditions over the full care cycle.
• Create a payment system that provides incentives for colleagues (physicians, hospitals) to coordinate care for patients, improve care and support informed patient decision-making.
• Pay providers based on value, considering the needs and preferences of patients, measurable outcomes, safety and service compared to the cost over time.
• Payment systems should be designed to provide patients with no less than the care they need and no more than fully informed, cost-conscious patients would want.

Other Payment Options

Participants discussed several other payment options during the course of the forum, including the Medicare pay-for-performance model, fee-for-service with outcomes performance, fee-for-service with shared savings partnership and traditional capitation.

There was the least support for the current Medicare pay-for-performance model, which pays hospitals and physicians for complying with selected process measures.