Keeping Score

SUZANNE BOYD

Keeping Score

As pay for performance (P4P) is expanded by Medicare, many commercial insurance companies are jumping on the bandwagon as well. P4P or value-based purchasing is a payment model that rewards physicians, hospitals, medical groups and other healthcare providers for meeting certain performance measures for quality and efficiency. As with Medicare, many commercial insurance companies also are looking to tie reimbursement and, in some models, rewards to these quality measurements.

Quality measures from the Centers for Medicaid and Medicare Services (CMS) have been around for several years. Currently, reporting the quality measures to CMS is mandatory if hospitals do not want their reimbursement penalized. Additional measures have been added intermittently. Some states also have instituted reporting of quality measures. Tennessee, for example, recently instituted reporting requirements for hospitals in addition to those of CMS.

Through the efforts of CMS and the Hospital Quality Alliance (HQA), a public-private collaboration established to promote reporting on hospital quality of care, a consumer-oriented website, Hospital Compare, was created to provide information on how well hospitals provide recommended care to their patients. HQA is the reported CMS measures and consists of many facets. Its goals are to improve the care provided by the nation's hospitals and to provide quality information to consumers and others.

"As we saw the trend of pay for performance begin to migrate to the commercial side, we knew we needed to put in place a means of internally tracking where we were in a given program on a measure at any given time," said Bill Jones, director of Managed Care and Employer Services for West Tennessee Healthcare. "This internal system would allow us to not depend totally on the payor to tell us how we were doing."

In 2008, as the result of contract negotiations with a commercial payor that indicated that some level of P4P was coming down the pike, WTH began looking at implementing a "scorecard" program within its system. The program, which was a collaborative effort on both sides, was implemented in 2009 and will complete its first year of operation in August 2010. The scorecard applies to all six of WTH's affiliated hospitals.

"Both parties contributed in developing the matrix and what measures would be tracked. Our medical director and patient outcomes staff were instrumental in developing the matrix we use and worked with the commercial payor to outline what would be tracked," said Jones. "We have a number of initiatives that are constantly ongoing, such as to improve patient safety and outcomes which go hand in hand with a pay for performance payment structure."

The scorecard was not a reinvention of the wheel; the system uses information similar to the Medicare system to measure the various hospital quality and safety measures, such as CMS data, patient satisfaction surveys and outcomes measures. As the CMS data is updated on a quarterly basis, the scorecard is as well. In determining what would be used as quality measures or initiatives, WTH has some say in what was measured. Many times, the commercial side initiative is measured in a similar manner as with Medicare. Although Medicare P4P introduces new quality measures nearly every year, the commercial initiatives will change or expand as contract negotiations dictate.

The mandated Medicare P4P program regulations had already caused WTH to expand its administrative efforts due to the additional data that had to be collected and additional submission requirements, so implementing the "scorecard" was not a major burden to the system. "Due to the amount of data submission required to track the various measures for Medicare, we were already submitting data to areas we never had before and were tracking the measures and scores administratively. When commercial insurers got on the bandwagon, we found we were reporting more data to even more sites," said Jones. "The program tracks various measures throughout the hospital and those measures are weighted, which creates the score for that initiative. Just tracking that data and seeing that it is reported accurately and timely requires administrative efforts on our part between our outcomes, finance and managed care departments."

The internal "scorecard" is also a help in the budgeting process, as it affords managers a view of where they are on certain measures so they can anticipate the level of payment they will receive in the coming year. "From a budgeting standpoint, it is helpful to know what kind of payment you can expect, where you are doing well and identify where we can improve ahead of time," said Jones.

"The scorecard gives us visibility on where we are and allows us to anticipate payments, as well as be proactive in making adjustments and improvements," said Jones. "P4P is an emerging industry trend, and we have to find ways to work with all parties involved."

Jones anticipates that with future healthcare reform, P4P models could lead to more hospital and physician collaborations in the future. "As there are several P4P models out there that add a true reward element to the payment schedule rather than a reduction in reimbursement for not meeting the measures, hospital reimbursement can be tied into the physician's performance as well. As these models evolve, it may be in the best interest of both hospital and physician to work together to ensure the initiatives are met."