Home Health & Hospice Week

Demonstration project may be a sign of things to come.

Even if you're not in one of the seven states in the pay for performance demonstration project, you'll want to take a close look at the project's structure.

Ready or not: That's because it could at least partly mirror the overall P4P system that observers expect to hit the entire home health agency industry within a few years.

Here are the basics of the project:

Where: Agencies in four regions are eligible to participate--West (California), South (Alabama, Georgia, Tennessee), Midwest (Illinois) and Northeast (Connecticut, Massachusetts). The Centers for Medicare & Medicaid Services and its P4P contractor, Abt Associates, will make calculations for rewards by region.

Who: CMS and Abt randomly will split the volunteer agencies into two groups--control and experimental. For the control group, nothing will change and they'll get extra data reports on their patients only after the demo is over. The experimental group will be eligible for P4P payments and will receive their data during the project.

Abt is including only Medicare fee-for-service patients in the demo calculations. That will exclude Medicaid patients and those in Medicare managed care plans.

"We are happy that the calculation of the performance measures will be based solely on Medicare fee-for-service patients," applauds Brian Ellsworth with the Connecticut Association for Home Care. CMS and Abt originally planned to include all patients currently used in outcome-based quality improvement (OBQI) calculations.

When: CMS and Abt now are recruiting for the project that's set to begin Jan. 1 and run for two years. The project will cover the time the patient is on service and 30 days after discharge from home health.

What: The P4P demonstration project will reward agencies that are "top performers" and "top improvers," Abt's Henry Goldberg explained at an Oct. 9 session of the National Association for Home Care & Hospice's annual meeting in Denver.

How: Calculations for the project are complicated, with Goldberg showing multiple slides on determining demo winners. CMS and Abt will use 75 percent of the reward pool to fund incentive payments to the top 20 percent of agencies. CMS and Abt will make separate calculations for each of the seven measures in the project and they will calculate each of the four regions separately.

Payments for each measure are based on its relative weight. So, payments for hospitalization and emergency room measures will be more than for the other measures.

CMS and Abt will use the remaining 25 percent of the reward pool to fund incentive payments for the 20 percent of agencies that improve the most over their previous year's performance.

Exceptions: CMS and Abt won't reward agencies that are in the bottom 30 percent of performers, no matter how much they improve. And they won't pay agencies that improve if they are also top performers. In other words, you can only get paid once for each measure--either as a top performer or as a top improver.

Caveat: CMS won't pay out any money if the Medicare program fails to see overall savings on the patients in the demonstration. Abt will use claims data from all Medicare providers to see whether Medicare paid out less for patients in the experimental group versus the control group.

If the Medicare program doesn't see savings--for example, from reduced hospitalizations--then agencies won't receive incentive payments even if they are a top performer or improver.

Why: CMS is running the demo to see how agencies respond to payment incentives for quality improvements, Goldberg explained. The agency plans to use the information gathered to inform its launch of P4P for the entire industry in the near future.

But agencies in the demonstration will most likely see a kind er, gentler P4P than all agencies will see in subsequent years. That's because CMS is using only volunteers in the demo, and fewer agencies would be likely to volunteer if they would be subject to financial penalties under the project.

Watch out: When an overall P4P system is introduced, expect it to include financial penalties for bottom performers. Those reductions will most likely make up the reward pool for top performers.