Generous provider incentives deliver dramatic returns

A stunning success in the use of provider incentives to boost care. A physician incentive program established a decade ago by CA-based Inland Empire Health Plan has turned into a powerhouse for quality improvement. In fact, the approach has worked so well that the plan has now turned its attention to chronic care management, where early evidence suggests that generous bonus payments will produce improvements in clinical outcomes as well as process measures.

Pay-For-Performance: The MedPAC Perspective

Medicare payment systems are neutral and sometimes negative toward quality of care. The Medicare Payment Advisory Commission (MedPAC) has recommended that Congress build incentives for quality into Medicare's payment systems for hospitals, physicians, home health agencies, facilities that treat dialysis patients, and Medicare Advantage plans. In this Commentary we describe the rationale for the recommendations, criteria for determining which settings are ready, program design principles, and potential measures.

Pay for performance--for whom the bell tolls

Pay -for-performance programs require physician oversight and adherence to high ethical standards if they are truly going to succeed.

Integration demonstration. The CMS' latest pay-for-performance initiative will test the power of integrated delivery systems to alter doc practice patterns

Linda Magno of the CMS says the Medicare Health Care Quality Demonstration project is one of the agency's boldest initiatives yet. She says the project is a chance for providers to "redesign the healthcare system." The project will feature "a lot of latitude" in payment and waivers of Medicare provisions. And the CMS needs a few good volunteer providers to participate.

Impact of a restriction in the number of embryos transferred on the multiple pregnancy rate

OBJECTIVE

To study the impact of the introduction of reimbursement of in vitro fertilization (IVF)/intracytoplasmic sperm injection (ICSI) laboratory costs in Belgium which is linked to an embryo transfer strategy leading to prevention of multiple pregnancies. The impact on the incidence of multiple and twin pregnancy rate as well as on ongoing pregnancy rate in our centre is calculated.

STUDY DESIGN

Observational cohort study of all patients in the first year (July 1, 2003-June 30, 2004) since the implementation of the law and comparison of ongoing pregnancy rate and multiple pregnancy rate of our centre with Belgian data.

RESULTS

Our results of one year of IVF/ICSI since reimbursement of laboratory costs show a total conception rate of 42.2% with 29.7% ongoing pregnancies beyond 25 weeks amenorrhea. The multiple pregnancy rate was 8.5% including five monozygotic twin pregnancies. These data show an important decline of multiple pregnancy rate when compared to Belgian data (2002) with 24.4% multiple pregnancy rate in the year prior to reimbursement.

CONCLUSION

The introduction of reimbursement of IVF/ICSI laboratory costs coupled to a restriction in the number of embryos for transfer has reached the goal of halving the multiple pregnancy rate since its introduction while maintaining an optimal ongoing pregnancy rate.

Pay for performance: will your hospital be ready?

With increased payment-or, in some cases, even the ability to contract with a payer-likely to be tied to the achievement of quality measures, providers need to: work with physicians in developing associated care delivery protocols, establish compliance mechanisms that are acceptable to clinicians and meet appropriate regulatory and legal standards.

Incentives and pharmaceutical reimbursement reforms in Spain

The aim of this paper is to assess whether cost containment has been affected by recent pharmaceutical reimbursement reforms that have been introduced in the Spanish health care system over the period 1996-2002, under the conservative Popular Party Government. Four main reimbursement policies can be observed in the Spanish pharmaceutical market after 1996, each of them largely unintegrated with the other three. First, a second supplementary negative list of excluded pharmaceutical products was introduced in 1998. Second, a reference pricing (RP) system was introduced in December 2000, with annual updating and enlargement. Third, the pharmacies' payment system has moved from the traditional set margin on the consumer price to a margin that varies according to the consumer price of the product, the generic status of the product, and the volume of sales by pharmacies. And fourth, general agreements between the government and the industry have been reached with cost containment objectives. In the final section of this paper, we present an overall assessment of the impact of these pharmaceutical reimbursement policies on the behaviour of the agents in the pharmaceutical market.

Practice variations in home health care

Wide variation in Medicare home care utilization became apparent in the 1990s. This study examined the impact of patient, provider, agency, and market factors on five measures of home care practice. Data were collected at 44 agencies in eight states. The final analysis sample included 732 home care episodes for which longitudinal patient data were available. Results indicated that patient factors, such as complexity and functional status, were important predictors of the care a patient received. Agency and market characteristics also strongly influenced care practices. Characteristics of the care providers, on the other hand, exerted only minimal influence.

New Jersey experiment. Eight hospitals will participate in CMS 'gainsharing' project, in which doctors can earn bonuses of up to 25% on Medicare fees

A CMS project will let doctors earn bonuses for helping hospitals cut inpatient costs, using software designed by Michael Kalison, left. But not everyone is excited about the plan, including U.S. Rep. Pete Stark, the California Democrat who championed the physician self-referral legislation the CMS is waiving for the program.

Realigning incentives in fee-for-service Medicare

This paper proposes Medicare payment reform built on the fee-for-service system, with incentive payments to eligible provider organizations determined by their rate of increase in cost per patient compared to the overall growth rate in the community. By planning and monitoring how care patterns are altered to achieve greater efficiency, policy-makers can align the incentives of Medicare and the provider organization better than using either fee-for-service or capitation alone. This reform, unlike capitation, maintains Medicare's historical role as insurer and focuses providers on managing care.

Time to pay for quality. CMS will partner with premier in trial project to give financial bonuses to hospitals that deliver the best care

The Centers for Medicare and Medicaid Services is poised to announce a new pilot program in which it will partner with healthcare alliance Premier to reward top performing hospitals with recognition and, more importantly, added dollars. Though a relatively risk-free step for the nation's largest payer, it marks a seminal moment for the burgeoning paying-for-quality movement in healthcare.

[Remarks on the introduction of the German Diagnosis-Related Groups (DRGs) for the specialty of urology]

In January 2003 a new system to charge inpatient treatment was established in Germany: the G-DRGs. This system is based on the thought that equal medical service causes equal costs all over Germany. Hospitals offering a broad spectrum of diagnostics and therapies and being unable to select their patients according to economical aspects are put at disadvantage: Despite a perfect documentation the G-DRGs reflect their medical service only in an insufficient way. Tools for an optimized coding must be a coding manual created for the specific needs of urologists and an infrastructure that allows a permanent quality control for all persons involved.

The economic implications of case-mix Medicaid reimbursement for nursing home care

In recent years, there has been large growth in the nursing home industry in the use of case-mix adjusted Medicaid payment systems that employ resident characteristics to predict the relative use of resources in setting payment levels. Little attention has been paid to the access and quality incentives that these systems provide in the presence of excess demand conditions due to certificate-of-need (CON) and construction moratoria. Using 1991 to 1998 panel data for all certified U.S. nursing homes, a fixed-effects model indicates that adoption of a case-mix payment system led to increased access for more dependent residents, but the effect was modified in excess demand markets. Quality remained relatively stable with the introduction of case-mix reimbursement, regardless of the presence of excess demand conditions. These results suggest that CON and construction moratoria are still important barriers within the nursing home market, and recent quality assurance activities related to the introduction of case-mix payment systems may have been effective.

Percentage compensation arrangements: suspect, but not illegal

Percentage compensation arrangements, in which a service is outsourced to a contractor that is paid in accordance with the level of its performance, are widely used in many business sectors. The HHS Office of Inspector General (OIG) has shown concern that these arrangements in the healthcare industry may offer incentives for the performance of unnecessary services or cause false claims to be made to Federal healthcare programs in violation of the antikickback statute and the False Claims Act. Percentage compensation arrangements can work and need not run afoul of the law as long as the healthcare organization carefully oversees the arrangement and sets specific safeguards in place. These safeguards include screening contractors, carefully evaluating their compliance programs, and obligating them contractually to perform within the limits of the law.

HMO malpractice: have the floodgates opened?

The U.S. Supreme Court's holding in Pegram v. Herdrich--that decisions by an HMO's physician employees in which eligibility issues and reasonable medical treatment are inextricably mixed are not fiduciary acts under the Employee Retirement Income Security Act (ERISA)--was applauded by the managed care industry. By delineating issues on which it was not ruling, however, the Court's decision may have given a boost to additional lawsuits against managed care plans on both ERISA and malpractice grounds.

ERISA and RICO: new tools for HMO litigators

As the shield preempting state suits under the Employee Retirement Income Security Act (ERISA) has been successfully pierced (see California Div. Of Labor Standards Enforcement v. Dillingham Constr. N.A. Inc., 519 U.S. 316 (1997) and Duke v. U.S. Healthcare, Inc., 57 F.3d 350 (3rd Cir. 1995)), plaintiff attorneys have begun to use the ERISA statute itself to further litigation against managed care organizations. The court in Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997), held in a landmark decision that an HMO's failure to disclose financial incentives that discourage a treating physician from providing essential health care referrals for conditions covered under the plan benefit structure is a breach of ERISA's fiduciary duties.