Paying for Quality Health Care:
States’ Roles
CSG/ERC Value-based Purchasing Group meeting
August 3, 2009
Burlington, VT
Ellen Andrews, PhD
www.csgeast.org
Overview
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Health care spending
Health care quality
Problems with current payment systems
What is value-based purchasing?
Federal level – Medicare, national health reform
Paying for value/quality – why states should be engaged
Options
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P4P
Data reporting, report cards
Never events
Episodes of care, bundling payments
Global capitation
Supporting options
Lessons
Next steps
Health care spending
health costs vs. state budgets, US
National health exp.
18
16
state budgets nominal
increase
12
10
8
6
4
2
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
-2
1981
0
1979
annual % change
14
And it’s going to get worse
Annual % rates of change, US
projected
NHE
GDP
8
CPI
7
State and local health
expenditures
6
5
4
3
2
1
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
-1
2004
0
State spending
Health Care Spending as % US avg, 2004
135%
125%
115%
105%
95%
85%
75%
US
CT
DE
MA
ME
NH
NJ
NY
PA
RI
VT
State spending
per person health spending as % gross state product, 2004
25
percent
20
15
10
5
0
US
CT
DE
MA
ME
NH
NJ
NY
PA
RI
VT
Quality
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Only 39% of American adults are confident
that they can get safe, effective care when
needed
Americans get only 55% of recommended
care on average
Half of Americans report poor coordination of
care; especially among those who see more
than one doctor
One in three Americans reports getting
unnecessary care or duplicate tests.
Quality in the region
Readmission rates, Medicare
% of discharges readmit w/in 30 days
22
21
20
19
18
17
16
15
US
CT
DE
MA
ME
NH
NJ
NY
PA
RI
VT
PR USVI
Quality in the region
% children with a medical home
70
65
60
55
50
45
40
US
CT
DE
MA
ME
NH
NJ
NY
PA
RI
VT
Quality in the region
avoidable diabetes admissions, adults
per 100,000
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
US
CT
MA
NH
NJ
NY
RI
VT
Quality in the region
Pediatric asthma admissions
300
250
200
150
100
50
0
US
CT
MA
NH
NJ
NY
RI
VT
If it’s not broken, don’t fix it
Well, it’s broken
US health care spending as % GDP
25
20
15
10
5
0
1960
1970
1980
1990
2000
2003
2007
2010
2014
2018
Current incentives
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Pay the same for unequal quality services
Consumers have no information and no
incentive to choose higher quality/higher
efficiency service providers
Encourages overuse, misuse of services
Higher spending not correlated with higher
quality
Higher spending not correlated with better
patient satisfaction
Fee-for-service misaligned incentives
Fee for service encourages:
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More services
Less coordination
Incentives for duplication
Few incentives for prevention
Stifles innovation
Only pays for selected services - not email, group visits,
phone calls
No link to quality
Incentives to increase high profit services/patients and
avoid low profit
Value-based purchasing
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Rewards better outcomes
Payments based on quality and efficiency of care
Data driven
Remove incentives for more services
Flexibility for providers to customize care
Reward patient satisfaction
Remove fragmentation and conflicting incentives
Align provider, payer and consumer incentives to
reward quality, effectiveness and efficiency
Consumers support value-based
purchasing
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95% of Americans feel it is important to have
information about the quality of care provided
by different doctors and hospitals
88% feel it is important that they have
information about the costs of care to them
before they actually get care
Federal VBP
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Strong feature in national reform discussions
– Senate Finance, HELP and House bills
Medicare
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23 programs – P4P, pay for reporting, never
events, medical home, gain sharing, removing
regulatory barriers, e-prescribing, data
aggregation
Premiere Demonstration – hospital P4P
Implementing differential payments based on
readmission rates
Why should states implement VBP?
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State employee groups usually one of largest
groups in state – 42 states self-insure
Medicaid programs – covers one in five Americans
States regulate insurers, license providers, CON
Trusted source for consumer education, data
collection, research
Public health collaborations
Innovators – medical home, HIT, coverage programs
Provider training – promote primary care, emphasis
on accountability, transparency
Convener – can get people to the table
Options: Transparency
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Data reporting
Report cards – hospitals, health plans,
providers
Coalitions with other payers, providers for
joint reporting
All payer data aggregation
State employee, Medicaid reporting
Improve consumer access to information
Options: P4P
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Widespread, but mixed results
Medicaid P4P in 28 states and growing
Federal Medicaid limits on incentive payments in
risk-based systems
Target health plans and/or providers
Coordinate and join with other payers to make
payments salient to providers
Outcomes vs. process and teaching to the
test/cookbooks
Provider resistance, low Medicaid participation rates
Options: Payment system overhaul
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Never events
Market share – tier and steer
Shared savings
Episodes of care, bundled payments
Global capitation
Resistance
Barriers
Supportive options
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Medical home
Accountable care organizations
EMRs, health information exchange
Workforce development, esp primary care
Evidence based medicine
Lessons from others
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Collaborate first
Go slowly
Start small and with strongest partners
Coordinate across payers -- standardize
Fair and open process
Everyone on same page, all have same understanding
Be clear on goals, single-minded dedication
Strong consumer education piece necessary
Plan for transitions
Don’t underestimate the power of disclosure and transparency,
often stronger motivator than $$$
Be brave
Committee options
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Study
 How states implementing, diversity of approaches
 Track barriers, successes
 Resources needed
 Lessons learned
Tools
Website
Conference calls
Updates
Advocacy with federal government for resources, flexibility
State visits
Develop guiding principles