Take proactive steps with pay for performance

With a growing number of private insurers and agencies such as the Centers for Medicare & Medicaid Services (CMS) heavily involved in pay-for-performance arrangements, quality managers should become proactive about exploring and understanding this growing trend, says one pay-for-performance expert.

"If I was in the hospitals’ shoes, I’d tell them: First, explore pay for performance now with their largest payers, and see how it differs from what CMS is proposing," advises Carey Vinson, MD, medical director for quality management at Pittsburgh,-based insurer Highmark Inc.

"Are they developing something they are going to mandate in the next year or two? Perhaps if it is not yet well-defined, the hospital can get involved in its development," he explains.

Whatever else you do, be sure to look carefully at how your own facility measures value, Vinson adds, because this will stand you in good stead with payers.

"Be more aggressive at subdividing the data. So, for example, instead of just collecting data on complication rates, maybe you could look at types of complications, time of day, type of surgery, surgeon — in other words, have more analysis built into your data collection system," he advises.

"This way, you will be able to plan your interventions more carefully, and if a payer comes in and asks how you would like to structure the agreement, you can say, We measured these 20 points. Here’s how we broke them down and benchmarked, and here’s what we’re ready to work on.’ It gives you a good place to start," Vinson notes.

In addition, he emphasizes, recognize that there are unavoidable complications. "You have to open up your reporting and create a no-fault reporting system; allow staff to report without any worries about losing privileges or getting fired. Do that now," Vinson insists.

Highmark’s own pay-for-performance approach is very creative and involves significant input from the hospitals.

"We currently have a volunteer model in place with 14 hospitals, whereby we try to meet some of the hospitals’ concerns," he says. "We choose voluntary negotiated parameters with each hospital, which cover the topic areas."

Highmark strives to include at least one measure on safety, one on medication error reduction, and then two regarding clinical or service problems that the hospital has identified as being less than optimal or benchmark.

"Then, we outline a number of steps we expect the hospital to take in order to meet these measures," Vinson says.

Hospitals are given credit for internal measurement; for determining areas that need improvement; for conducting a benchmarking study that shows how they rank in the country; for putting together a QI initiative; for undertaking interventions; for remeasuring; and ultimately, for showing improvement. "You don’t have to be perfect right away; we don’t want that to be mandated," he notes. "The more they do, the more [credit] they get."

In addition, Highmark expects continuous improvement. "If you get to 100% on a specific measure, you have to drop that indicator and add a new one," he explains. "We want the hospitals to show improvement."

Finally, Highmark addresses one very real concern of hospitals. "They feel like if they are supposed to reduce errors, such as medication errors, they’ve got to buy new technology, but often they don’t have the money," Vinson says.

"So, we tie pay to the steps taken by the hospital to achieve reduction in medical errors, and we pay them so can they get the money quickly to buy more technology." But it’s not a blank check, Vinson notes.

"We only give you the money if you take specified actions," he explains.

Such pay-for-performance arrangements "can be worth millions" to a hospital, Vinson says. "For some of the hospitals, it is their margin; we shoot for anywhere between 15% to 25% of total reimbursement," he concludes.