Gregory C. Pope

Pay for performance in health care: Methods and approaches

document when you quote from it. You must not sell the document or make a profit from reproducing it. Chapter 4 Concerns about quality of care have accelerated since the 1990s, as studies by Wennberg, Fisher, and others have documented large and unexplained variations in rates of health care utilization and clinical outcomes across geographic areas, calling into question the traditional approach of relying on the medical profession to deliver high-quality care uniformly (Davis & Guterman, 2007; Wennberg et al., 2002). Since about 2000, several landmark publications have highlighted widespread problems with patient safety and quality of care, most notably from the Institute of Medicine (IOM) and the These studies helped to galvanize a policy consensus, leading the federal government and private health insurance plans to increasingly focus policy, regulatory, and management interventions more directly on quality of care measurement, quality improvement programs, and financial incentives for quality improvement through pay for performance (P4P). P4P programs have focused primarily on quality of care measures to assess provider performance. Although other performance evaluation approaches, such as efficiency measures, are possible for P4P, those in policy circles currently perceive the lack of incentives for improved quality in the prevailing fee-for-service (FFS) payment systems as a major problem in the US health care system. As a result, P4P programs have focused mainly on addressing this problem. This chapter reviews issues regarding the application of quality measures in P4P programs. The first section of the chapter provides background, including conceptual frameworks for quality of care, and reviews organizations that develop and certify quality measures. The second section discusses different types of quality measures, including structure, process, and outcome measures (Donabedian, 1966). The third section reviews issues in selecting quality measures for P4P programs. The fourth section describes methods for 100 Chapter 4 analyzing quality measures for P4P. The fifth section discusses public reporting of quality measures and how that separate approach to quality improvement can be integrated with P4P programs.

Economies of Scale in Physician Practice

A potentially important source of productivity gains in physician practices is larger practice size. We investigate economies of scale in physician practices using a large nationwide survey of self-employed physicians. When output is measured by practice revenues, we estimate significantly increasing returns to scale for single-specialty practices, implying that forming larger practices lowers costs. The lowest-cost practice size is estimated to be 5.2 physicians compared to a sample average size of 2.4 physicians. On average, scale inefficiency is estimated at 9%. Measuring output by physician office visits, we find that group physicians provide 17% more office visits than solo practitioners, controlling for practice inputs, and physician and practice characteristics. Physicians practicing in mid-sized groups of three to four are the most productive, providing 21% more visits than solo, Physicians. If all physicians practiced in the most productive group size, average office visit productivity would rise by 13%.

Improvements in Medicare Part D risk adjustment: Beneficiary access and payment accuracy:

Introduction:The continued success of the Medicare Part D program is contingent on appropriate Medicare payment adjustments for the projected drug costs of Part D plan enrollees. This article describes a major revision of these “risk adjustments,” intended to more accurately match payments to costs, especially for high-cost, disadvantaged populations. Methods:For the first time actual Part D data are used to calibrate risk adjustment. The sample is Medicare beneficiaries with fee-for-service enrollment in 2007 and Part D standalone prescription drug plan enrollment in 2008 (N=14,224,301). Part D plan liability expenditures are predicted using demographic and diagnostic factors in a weighted least squares regression. Models for Medicare subpopulations are analyzed. The predictive accuracy of risk adjustment models is evaluated using R2 and predictive ratio statistics. Results:Based on differences in both mean expenditures and incremental expenditures by diagnosis, separate Part D risk adjustment models are calibrated for 5 Medicare subpopulations: aged not low income; aged low income; nonaged not low income; nonaged low income; and institutionalized. The variation in plan liability drug expenditures (R2) explained by these models ranges from 13% to 29%. The 5 separate models accurately predict mean plan liability expenditures ranging from

The marginal practice cost of physicians' services

967 to

Affordable Care Act Risk Adjustment: Overview, Context, and Challenges

1762 across subpopulations and account for differences in incremental disease coefficients by subpopulation. Conclusions:The refined Part D risk adjustment model represents a significant improvement in the accuracy and fairness of payment to Part D plans. The new model provides greater incentives for drug plans to compete for low-income and institutionalized enrollees.

CRNA (certified registered nurse anesthetist) manpower forecasts: 1990-2010.

Abstract The Medicare Fee Schedule treatment of physician practice expenses has been criticized for not being resource-based. Proposals to reform the methodology for allocating practice expenses to specific services depend critically on accurate measures of the marginal cost of physician outputs. We estimate the marginal practice cost of five outputs—office visits, “other visits”, operations/assists, laboratory tests, and relative value unit (RVU)-weighted diagnostic tests—using a multiproduct, quadratic cost function for samples of single-specialty, self-employed general/family practitioner and general surgeon practices.

The national market for Medicare clinical laboratory testing: implications for payment reform.

Beginning in 2014, individuals and small businesses will be able to purchase private health insurance through competitive marketplaces. The Affordable Care Act (ACA) provides for a program of risk adjustment in the individual and small group markets in 2014 as Marketplaces are implemented and new market reforms take effect. The purpose of risk adjustment is to lessen or eliminate the influence of risk selection on the premiums that plans charge and the incentive for plans to avoid sicker enrollees. This article--the first of three in the Medicare & Medicaid Research Review--describes the key program goal and issues in the Department of Health and Human Services (HHS) developed risk adjustment methodology, and identifies key choices in how the methodology responds to these issues. The goal of the HHS risk adjustment methodology is to compensate health insurance plans for differences in enrollee health mix so that plan premiums reflect differences in scope of coverage and other plan factors, but not differences in health status. The methodology includes a risk adjustment model and a risk transfer formula that together address this program goal as well as three issues specific to ACA risk adjustment: 1) new population; 2) cost and rating factors; and 3) balanced transfers within state/market. The risk adjustment model, described in the second article, estimates differences in health risks taking into account the new population and scope of coverage (actuarial value level). The transfer formula, described in the third article, calculates balanced transfers that are intended to account for health risk differences while preserving permissible premium differences.

MINIMUM SAVINGS REQUIREMENTS IN SHARED SAVINGS PROVIDER PAYMENT

The delivery of anesthesia services is at a crossroads in the United States. In 1967, there were two certified registered nurse anesthetists (CRNAs) for every anesthesiologist providing anesthetics, and the numbers are nearly equal today. A CRNA manpower forecasting model is developed in this article that shows CRNA supply and requirements from 1990 through 2010. Two estimates of CRNA shortage are presented, one based on the current trend of anesthesiologists replacing CRNAs and another assuming that CRNAs are involved in every anesthetic under anesthesiologist supervision. The results imply that more than a twofold increase in CRNA school enrollments is needed just to fill conservative baseline needs given the predicted growth in operations in all settings. Limiting anesthesiologists to a supervisory role, at the other extreme, would require a doubling of CRNAs by 2010 and an even greater expansion of CRNA schools. However, it is estimated that reversing CRNA manpower trends could save society between

Refinements of the Medicare Outpatient Therapy Annual Expenditure Limit Policy

750 million and

Competitive bidding for Medicare Part B clinical laboratory services

1.2 billion annually.The delivery of anesthesia services is at a crossroads in the United States. In 1967, there were two certified registered nurse anesthetists (CRNAs) for every anesthesiologist providing anesthetics, and the numbers are nearly equal today. A CRNA manpower forecasting model is developed in this article that shows CRNA supply and requirements from 1990 through 2010. Two estimates of CRNA shortage are presented, one based on the current trend of anesthesiologists replacing CRNAs and another assuming that CRNAs are involved in every anesthetic under anesthesiologist supervision. The results imply that more than a twofold increase in CRNA school enrollments is needed just to fill conservative baseline needs given the predicted growth in operations in all settings. Limiting anesthesiologists to a supervisory role, at the other extreme, would require a doubling of CRNAs by 2010 and an even greater expansion of CRNA schools. However, it is estimated that reversing CRNA manpower trends could save society between