The Special Commission on Payment Reform held its second meeting on Friday, February 13th (All of the meeting materials are available here). The Commission welcomed Rep. Harriet Stanley as the new House appointee. Guest speakers presented the Commission with in-depth information about medical home models, pay for performance strategies and the intersection between payment models and benefit designs, and discussed the feasibility of these proposals for Massachusetts. The Commission and guest speakers wove the thread of the need for consumer feedback throughout their discussion.
Consultant Michael Bailit updated the Commission on the progress of the stakeholder meetings: DHCFP Commissioner Sarah Iselin and Administration and Finance staff have begun the first of three rounds of meetings with groups of physicians, community hospitals, teaching and safety net hospitals, consumer advocates and labor representatives to gather feedback on the payment reform process. Input from these stakeholder engagement sessions is summarized here (.pdf).
Deborah Chollet, of Mathematica Policy Research, Inc., provided the Commission with a high-level overview (.ppt) of Fee for Service, episode-based payment and global payment models. Dr. Chollet emphasized the incentives for providers embedded in each model. As the Fee for Service (FFS) model pays providers for individual services performed, providers are motivated to increase the volume of services and provide a more costly mix of services. Usually built on the FFS or the partial capitation payment model, Pay for Performance (P4P) programs increases payments to providers that deliver higher quality and more cost-efficient care. In episode-based payment structures providers are paid prospectively for a clinical episode of care, so providers are incentivized to constrain costs, volume and service mix. When providers are paid a global payment, or a fixed amount per patient per month, there is a strong incentive to constrain costs, volume and service mix and to avoid high cost patients. The medical home model focuses on primary care, disease management, and care coordination and is designed to improve value, but not necessarily reduce costs.
The Payment Reform Commission got their feet wet in the medical home model pool with a presentation from Michael Bailit (.ppt). Bailit explained the origins and evolution of the medical home model, as well as eight variations of medical homes that have been implemented across the nation. According to Bailit, although there is limited research on the effectiveness of the medical home model, initial findings have been positive.
Rhode Island Health Insurance Commissioner Christopher Koller led the Commission deep into the medical home model pool by describing how Rhode Island has translated the medical home principles into a payment model. Commissioner Koller presented the experiences of the Rhode Island Chronic Care Sustainability Initiative (CSI-RI)(.ppt). CSI-RI is a statewide, multi-stakeholder effort designed to develop and support a sustainable model for the delivery of chronic illness care in primary care settings. CSI-RI is a two year pilot program, initiated in October 2008 and involves all of the major payers in the state except for Medicare. The program enhances payments to primary care providers for the delivery of high quality chronic illness care and establishes medical homes. The plans participating in the initiative provide supplemental payments of $3pmpm and pay the cost of nurse managers. The providers are required to implement an advanced medical home model and chronic care collaborative, measure the progress of the model, publicly report on this progress and engage and educate the public. Commissioner Koller shared advice, including having consumers play a larger role in implementation, and described barriers and opportunities to implementing the Chronic Care Sustainability Initiative in Rhode Island.
Next, Suzanne Felt-Lisk, of Mathematica Policy Research, Inc. helped the Commission wade through the details of Pay for Performance (.ppt). Felt-Lisk presented information on the initial research regarding P4P programs that were undertaken from 2006-2007. Felt-Lisk informed the Commission that this limited research indicated that P4P programs have only been found to yield marginal benefits. More research is necessary for a full evaluation. Massachusetts is well ahead of the rest of the nation in experimenting with P4P programs. A 2007 study found that 89% of physicians in this state had some sort of P4P incentive in at least one commercial health plan contract and 56% of physicians reported moderate or significant impact of these P4P incentives. In these programs “Performance” is measured in various ways, including utilization measures, use of information technology and patient satisfaction surveys. Feedback from providers reveals that physicians generally support the concept of P4P, but are frustrated with varying incentives, along with other concerns. Moving forward, Felt-Lisk suggested that P4P programs solicit physician input, explicitly communicate rewards and measurement standards of performance and monitor patients for unintended consequences. Commission member Lynn Nichols echoed the importance of aligning quality incentives. Dr. Alice Coombs commented that P4P does not address the over-use and mis-use of services and technology.
Finally, the Commission splashed around in payment models and benefit designs with a presentation from Deborah Chollet (.ppt). Dr. Chollet described evidence-based purchasing strategies, with an emphasis on consumer-directed health plans and tiered networks. Consumer-directed health plans (CDHPs) use high deductibles and personal health spending accounts to increase consumer accountability for health care spending. The rationale is that if consumers are equipped with cost and quality information about providers and treatment options and are exposed to a larger share of the financial burden they will choose providers that deliver higher quality, lower cost care. Dr. Chollet reported that there is insufficient evidence that CDHPs lower costs and satisfaction levels are low among consumers with CDHPs. Healthier, higher-income people and men are more likely to take up CDHPs. According to Dr. Chollet, CDHPs are often not well-understood and the personal health spending accounts are not adequately funded, resulting in over-consumption of care once the deductible is met, increased bad debt for hospitals and insufficient primary care.
Tiered networks categorize providers into tiers based on cost or quality measurements and reward consumers with lower cost-sharing for choosing providers in the high quality, low cost tiers. According to Commission member and Group Insurance Commission (GIC) Executive Director Dolores Mitchell, the GIC has moved into tiered networks by placing providers into three tiers. Dr. Alice Coombs criticized tiered networks as having the unintended consequence of serving as a barrier to physicians’ practices. Dr. Chollet also mentioned another benefit design option, Value-Based Insurance Design, which uses incentives (reduced or no cost-sharing) to promote the use of appropriate, cost-effective preventive care. Commission co-chair and Administration and Finance Secretary Leslie Kirwan questioned what the best model would be for engaging consumers.
The next meeting of the Payment Reform Commission is scheduled for Tuesday, February 24th, 2-5 pm in the 21st floor conference room of One Ashburton Place, Boston.
Catherine Hammons
This is all insane.
The very reason we have costs spiraling out of control is because somebody besides the patient foots the bill for care. One membership fee, and all expenses paid or not by somebody else. Every scheme devised (HMO, PPO, EPO, VA, Medicare, Medicaid) are all slowly going broke or raising rates of membership fees to the point of insanity. All driven by the fact that Medicare and Medicaid fix hospital reimbursement for the patients (the poor and the old) that gobble up 2/3 of the health care dollar. Price fixing lead to hospitals raising the price for everybody else!
If you want cost controls, make patients responsible for the economic consequences of their own health. That will never happen, since personal responsibility and allowing price to ration care is now unthinkable.
Our Federal budgets are going to spiral out of control anyway, so who cares, anyway? Why not expand the role of the government beyond the Medical Home? How about a new Economic Home model, with the central government make rationing schemes for rewards of clothes, food, and shelter based on job performance as defined by a politician? Wouldn’t that be more efficient than letting some market force define who gets what?
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