Medicare Compliance & Reimbursement

CMS plans to launch a P4P demo for the home care industry--soon.

Providers can't just ignore pay for performance--the mechanism is gaining speed and could become a chief determining factor for Medicare payments sooner than providers think.

That was the message of multiple presenters at the National Association for Home Care & Hospice's annual policy conference in Washington, DC the last week of March.

The Centers for Medicare & Medicaid Services is shifting its payment policies for many provider types toward "quality and outcomes," noted Laurence Wilson, director of CMS' Chronic Care Policy Group, in a March 27 CMS panel on regulatory and policy issues. Pay-for-performance models are an important part of that focus, Wilson told attendees.

In particular, CMS plans a demonstration project to test a home care P4P model, Wilson revealed. After thorough research and model testing, CMS would roll out a P4P model to the entire industry.

"This is really an imminent change in the payment system," agreed Sharon Bee Cheng, senior analyst for the Medicare Payment Advisory Commission, in a separate March 27 presentation focusing on P4P. Congress has essentially made up its mind to implement P4P and is merely working out the details now before passing requirements, Cheng told conference attendees.

A home care P4P model will first have to nail down major details, however. Congress and CMS must decide on which measures they will judge--and pay--agencies. MedPAC recommends starting with the current outcome- based quality improvement (OBQI) measures agencies are using, particularly those on Home Health Compare, Cheng notes.

But P4P shouldn't end with OBQI measures, Cheng suggests. Instead, the program should evolve to also include patient "experience" measures and process-based measures, which MedPAC appears poised to endorse in its June report to Congress.

Providers actually prefer process measures because they have direct control over them, said Amanda Twiss, president of Seattle-based benchmarking company Outcome Concept Systems, in the same presentation. On the other hand, many factors outside of an agency's control tend to influence patient outcome measures.

P4P measures should be industry accepted, evidence-based, based on data collected with a standardized tool and risk adjusted, Cheng says. And providers should be able to improve on them. "We want as great an impact on as many patients as we can," she notes. Moving a score from 98 to 99 percent "is not a lot of bang for the buck."

P4P Bonus Size, Structure Could Divide Providers

P4P programs for private payers range from a 1-percent bonus to as much as 10 percent, Twiss notes.
 
MedPAC recommends starting with a small portion of payments that grows over time, Cheng says. A good place to start might be shaving 1 percent of payments off the base episode payment rate to form an award pool. Agencies could receive different bonus amounts depending on performance, she adds.

But CMS must be careful not to create a two-tiered system of care, warned Chicago-based regulatory consultant Rebecca Friedman Zuber during the P4P session's question-and-answer portion.

Taking money from poor performers to pay top performers encourages two levels of care, Zuber criticizes.

A P4P model can reward two categories--providers who achieve top measure scores or providers who improve their measure scores the most, Twiss notes. While a P4P program should reward top performers, it shouldn't create access problems for difficult patient populations.

Policymakers also must decide whether to set an absolute value for agencies to achieve or a percentage of top performers. For example, a P4P model could reward agencies that have a 25-percent hospitalization rate or those who are in the top 10 percent nationwide for hospitalization rates.

An absolute measure is a specific number to shoot for and is easier for providers to grasp, Twiss says. The bonus of a comparative approach is that the bar rises for everyone as outcomes improve.

"The risk adjustment has to be adequate to pull [P4P] off," Cheng admits.

Even for the OBQI measures that the National Quality Forum endorses and Home Health Compare displays, the risk adjustment doesn't completely account for patient differences, Twiss notes, citing data analysis for 2005. Even including risk adjustment, outcomes differed for patients in different diagnosis groups, long stays versus short stays and different regions of the United States, the OCS analysis shows.

Chronic patients generally fared the worst, even under risk adjustment, Twiss explains. A P4P program based on the current OBQI measures could create access problems for these patients.

Cheng expects Congress to pass P4P legislation this year or next year. The Deficit Reduction Act requires MedPAC to make home health P4P recommendations in a June 2007 report.

So, CMS could have a P4P model ready to roll as early as 2008, after a demo, Wilson predicts.