1. A Review of National Trends Venture Advisory Services
  Pay for Performance: Have Expectations Exceeded Outcomes?
A Review of National Trends
and Future Directions
Geof Baker, Principal
Venture Advisory Services

2. Agenda
National Context
Lessons Learned
Release 3.0
National Context 2

3. Growth in P4P Programs by Sponsor Type (2003 -2009E)
P4P Market Adoption Has Matured
Growth in P4P Programs by Sponsor Type ( E)
No. of P4P Programs
by Sponsor (2007)
N=148
Source: Med-Vantage-Leapfrog 2006 National Survey with 2007 Market Updates
Note: For “Other” in 2007, included disease management programs and vendors with P4P incentives under the primary program sponsor (Medicaid) and 10 projected implementations .

4. P4P Incentives Extend to All Providers
Source: Med-Vantage-Leapfrog 2006 National Survey with 2007 Market Updates

5. The P4P Evolution Roadmap
1st Generation ( )
2nd Generation ( )
3rd Generation ( )
Policy
National Attention
Measure Leadership
Performance Measurement & Evidence Stewardship
Growth & Sponsors
Early Adopters -
Early Majority
(Plans – HMO Product)
Late Majority
(Plans, CMS, Employers)
Laggards – Mature
Broad Market Adoption (CMS, Medicaid)
Return on Investment / Intervention
“Next Wave”, Anecdotal ROI. Focus on UM measures and Rx generic substitution to save $$.
“Not a Panacea.” Signs of progress: positive clinical improvement with diminishing returns.
Mixed results from evaluative studies (RWJ, CMS). Confounding factors.
Cost increases initially for deferred preventative care.
Achieve dramatic reductions in misuse, overuse, underuse and preventable errors.
Broad adoption of Erx, generic
Additional ROI Studies. Adoption of other payment models that complement P4P.
Number and Types of Measures
≈ 25 measures: PCP HEDIS, utilization, hospital chart, patient experience.
≈ 100 measures: specialty focus, process, structure, safety, HIT adoption, patient experience.
≈ 200 measures composite, outcome, & process measures.
HIT adoption, risk adjust, health disparities, multi-disease states.

6. The P4P Evolution Roadmap
1st Generation ( )
2nd Generation ( )
3rd Generation ( )
Data Source
Claims, chart (hosp)
Claims, some lab, Chart (hosp)
Enhanced data collection (PQRI, PHR, EHR) + admin data.
Data Aggregation
Minimal
Burdensome data collection, some aggregation
Multi-payor, single platforms. clinical data exchanges (HIE). Medical practice integration using IT.
Payment Method and Amounts
Withhold or Bonus based payouts
Threshold & ranking based performance
.5-1% Hospital payout
2-5% PCP payout
Differential fee schedules & bonus.
Threshold based & relative improvement performance
1-2% Hospital payout
2-15% MD payout
Differential fee schedules, value based payments.
Relative improvement, exception reviews
≥ 10% Hospital & MD payout
Integration with other Initiatives
Stand alone
Public reporting, Tiered Networks, HIT adoption
Programs complementing P4P, patient /member incentives & engagement
Reporting
Annual retrospective
Quarterly retrospective
Point-of-care interventions (alerts, reminders)

7. P4P Complements Other Initiatives
Standards
Interoperability
Data Aggregation
Tiered Networks
Value Based Benefit Design
Health Rewards
HIT Adoption
HIE, ERx, EHR
Payment Reform
Pay-for-Reporting
Pay-for-Process
- Data Quality
Integrated
Care
Management
Public Reporting
Transparency
Recognition
Medical Home
Provider Engagement
Best Practices
Pay for
Performance

8. Reasons for Implementing P4P Programs
 Criteria for Implementing P4P
Mean
2006
(n=62)
2005
(n=60)
2004
(n=50)
Improve patients’ clinical outcomes
4.63
4.36
4.60
Improve member experience (e.g., patient satisfaction)
4.00
N/A
Differentiate in the market, convey positive image
3.62
3.64
Drive standardization of performance measures
3.93
Align with other initiatives (e.g., disease management, high performance networks, consumer-directed benefit designs, consumer-directed provider report cards)
3.75
3.57
4.02
Reduce medical errors/improve patient safety
3.63
3.3
3.68
Improve bottom line, lower cost
3.53
3.24
3.28
Improve data collection and reporting from providers
2.99
3.44
Respond to employer pressures
3.14
2.74
2.87
Using a scale from 1-5, where 1 equals NOT important and 5 equals VERY important
Source: Med-Vantage/Leapfrog P4P Survey

9. Many Use P4P as a Strategy to Achieve Change
Informed Understanding
Access to Timely, Actionable Information
Data Integrity & Quality
Public Accountability
Transparency
Equity
Multi-stakeholder Participation
Legitimacy
Evaluation and Continuous Quality Improvement
Improving Quality of Care

10. Findings & Lessons Learned
National Context
Lessons Learned
Release 3.0
Findings &
Lessons Learned

11. Inherent Limitations ….But Here to Stay
Band-Aid
Rewards integrated with other initiatives
Insufficient Motivation
P4P payments > 10%, frequency to reinforce change
Critical Mass
All payer & aggregated data, uniform platforms with regional exchanges to increase sample size
Diminishing
Returns
Outcomes/composite measures, opportunity areas,
CQI culture, engage MDs, assisted interventions
Gaming
Exception reporting, risk adjustment
Health Disparities
Demographic adjustment required

12. Inherent Limitations ….But Here to Stay
Burdensome
Uniform measure sets, coordinated programs, HIT
Bias
Relative improvement payout models
Some +gains, few wind-ups, requires iterations & reengineering, cost of care/outcome measures
ROI Unknown
Patient Accountability
Value based benefit design, patient health rewards
Latency
Quarterly reporting, point-of-care interventions
Single Source of Truth
Data integrity, patient attribution, standards, clinical data exchanges, direct data submission, chart data

13. Data Submission & Integrity
Direct data submission (supplement claims with collection of clinical values from registries or EHRs, lab)
Multiple submission methods (secure sign-on, electronic)
Standardized data field definitions
All payer aggregation of admin data (claims, rx)
Immediate validation / integrity checks
Auditing and QA (correct coding)
Help desk and training support,
Models: IHA, MHQP, BTE, MN, BQI / Charter Value Exchange
Multiple attribution models - what are the intended purposes?

14. Next Generation Release 3.0
National Context
Lessons Learned
Release 3.0
Next Generation
Release 3.0

15. Anticipated Changes in P4P Programs
Changes anticipated in next 2 years to P4P Program
2006
Percent
(n=46)
2005
(n=82)
Expand program to include other products (e.g. PPO, ASO, CDH)
20%
40%
Expand program to include specialists if not doing so now
33%
Expand program to include additional specialties
26%
35%
Expand program to include hospitals if not doing so now
24%
27%
Expand the scope or number of measures used
70%
N/A
Change the performance domains or relative weighting
39%
67%
Develop a public performance report
43%
Tie the P4P program more closely to disease management, tiered networks, or benefit design initiatives
Discontinue the program 0%
Other 
21%
Data Aggregation –
Participation in state-wide, collaborative quality initiatives
Source: Med-Vantage-Leapfrog, 2006 National Survey with 2007 Market Updates

16. Road Ahead: Key Trends for P4P
CMS is now in business, More $ to incent sustained change
Strategy to achieve change and sustain CQI
Going beyond process measures with diminishing returns - Clinical measure impact must be demonstrable and focused
Cost of care (are we reducing trends, identifying overuse, misuse?)
Integration with other initiatives - HIT adoption (ERx), Medical Home, Health Rewards, Value Based Benefits, etc.
Methodology: full disclosure & open standards (nyrxreport.ncqa.org)
Physicians acting upon “actionable information” at point-of-care
Data aggregation, clinical exchange, clinical values, enhanced collection
Strong push for transparency