The Evidence for Using Incentives to Improve Quality in Health Care

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Outline of Talk. Pop quiz: What is known now?Some definitions of terms(Brief) description of a conceptual model of how incentives might workConclusions. Pop Quiz On QBP-Question

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The Evidence for Using Incentives to Improve Quality in Health Care

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1. The Evidence for Using Incentives to Improve Quality in Health Care R. Adams Dudley, MD, MBA Institute for Health Policy Studies University of California, San Francisco Support: Agency for Healthcare Research and Quality, California Healthcare Foundation, Robert Wood Johnson Foundation Investigator Award Program

2. Outline of Talk Pop quiz: What is known now? Some definitions of terms (Brief) description of a conceptual model of how incentives might work Conclusions

3. Pop Quiz On QBP-Question #1 Outcome variables: Are Vanderbilt pediatrics residents present for well-child visits for their patients? Do they make extra trips to clinic when their patients have acute illness Intervention: randomize them to receive (in addition to their usual salary) either: $2/visit scheduled $20/month for attending clinic What will happen???

4. Pop Quiz On QBP-Question #1 Answer: Hickson et al. Pediatrics 1987;80(3):344 $2/visit-incentivized residents did better on both measures

5. Pop Quiz On QBP-Question #2 Outcome variables: Are cardiothoracic surgeons in Memphis present for follow-up visits for their post-op patients? Intervention: randomize them to receive (in addition to their usual salary) either: $2/visit scheduled $20/month for attending clinic What will happen???

6. Pop Quiz On QBP-Question #2 Answer: OK, I’ve never met anyone who would dare to ask any cardiothoracic surgeons to enroll in a $2 trial

7. Pop Quiz On QBP-Question #3 Outcome variables: Do capitated medical groups do more Pap smears and mammograms? Intervention: randomize them to receive (in addition to their usual cap rate) either: 20% additional capitation for appropriate pts if in top decile, 10% extra if in second decile, 10% if in top 10% in improvement OR Nothing What will happen???

8. Pop Quiz On QBP-Question #4 Outcome variables: Do capitated med gps in Philadelphia do more colon cancer and breast cancer screening and mammograms? Intervention: randomize them to receive (in addition to their usual cap rate) either: Bonus (typical payout $600-$1,200) for increasing cancer screening OR Nothing What will happen???

9. Pop Quiz On QBP-Question #5 Which QBP approach (Question 3 vs. Q 4) will have the larger effect? Reminder: Question 3: Bonus to capitated medical groups that make top deciles on cancer screening measures? Question 4: Flat rate bonus to capitated medical groups to improve relative to their own performance?

10. Pop Quiz On QBP-Answer #3 Reminder: randomize med gps to receive (in addition to their usual cap rate) either: 20% additional cap if in top decile, 10% extra if in second decile, 10% if in top 10% in improvement OR Nothing Answer: No difference between intervention and controls!

11. Pop Quiz On QBP-Answer #3 Why did the incentive have no effect?: PROFESSIONAL INCENTIVES?: Actually, everyone improved a fair amount, so maybe the bonus was swamped by other factors UNCERTAINTY?: Also, groups had no idea how they had done in the past or were going to do in the future…couldn’t do an ROI

12. Pop Quiz On QBP-Answer #4 Reminder: randomize med gps to receive (in addition to their usual cap rate) either: $600-$1200 bonus for increasing colon and breast cancer screening rates OR Nothing Answer: No difference between intervention and controls!

13. Pop Quiz On QBP-Answer #4 Why did the incentive have no effect?: The incentive was negative, right? If you pay capitated medical groups to screen for cancer, they have to perform procedures on asymptomatic patients Doesn’t take many extra colonoscopies (3) to use up your $600 bonus…and if you actually find cancer, you have to pay for tx out of your cap rate

14. Pop Quiz On QBP-Answer(?) #5 Which QBP approach (Question 3 vs. Q 4) will have the larger effect? Reminder: Question 3: Bonus to capitated medical groups that make top deciles on cancer screening measures? Question 4: Flat rate bonus to capitated medical groups to improve relative to their own performance?

15. Pop Quiz On QBP-Answer(?) #5 Trick question, because neither worked But really, which is better? Or at least what distinguishes the 2?: Question 3: Bonus to capitated medical groups that make top deciles on cancer screening measures? Question 4: Flat rate bonus to capitated medical groups to improve relative to their own performance?

16. Pop Quiz On QBP-Question #6 Outcome variables: Do capitated med gps in 2003 do more Pap smears, mammograms, & blood sugar checks? Intervention: receive either: $0.23PMPM for getting to 75th percentile of 2002 med gp performance (had been receiving feedback for several quarters) OR Nothing What will happen???

17. Pop Quiz On QBP-Answer #6 Overall improvement was very small Most of the money went to the groups that met or exceeded the performance threshold BEFORE the program started …even though these groups had almost no improvement between 2002 and 2003!

18. Pop Quiz On QBP-Answer #6 Why did the incentive have so little effect?: If you were in the bottom 50% in 2002, getting to 75th percentile might’ve seemed pretty hard If you were at/above 75th percentile, you didn’t have to do anything So only the small % of med gps very close to the threshold actually had any incenitve

19. Pop Quiz On QBP-Question #7 Outcome variables: Do US hospitals engage in quality improvement activities Do pts change hospitals Intervention: HCFA (the old name for CMS) releases a report showing each hospitals overall mortality rate What will happen???

20. Pop Quiz On QBP-Answer #7 Answers: Hospital leaders said they didn’t use the data because they thought it was inaccurate, though there was a slight chance hosps rated as doing poorly would use data Not much impact on bed occupancy for hosps in NY

21. Pop Quiz On QBP-Question #8 Outcome variables: Do Wisconsin hospitals engage in quality improvement activities in obstetrics Intervention: three groups in this study: Public report of performance aggressively pushed by local business group to the media and employees, big focus on making the data understandable to consumers Confidential report of performance No report at all What will happen???

22. Average number of quality improvement activities to reduce obstetrical complications: Public report group has more QUALITY IMPROVEMENT (p < .01, n = 93)

23. Hospitals with poor OB scores: Public report group have the most OB QI activities (p = .001, n = 34)

24. Hospitals with poor OB score: Public report group have more QI on reducing hemorrhage –a key factor in the poor scores (p < .001, N=34)

25. Pop Quiz On QBP-Answers #7 & 8 So if you do it right, reputational incentives can have an impact… …and if you do it wrong, they probably won’t

26. Quality-Based Purchasing: A Definition Quality-Based Purchasing includes tactics that purchasers adopt with the goal of increasing the quality of care received by their beneficiaries These tactics could include: Using financial or non-financial incentives to directly reward improved provider behavior Incorporating provider quality information into the selection of providers or plans offered to beneficiaries Using financial and other incentives to encourage beneficiaries to select higher quality providers

27. Quality-Based Purchasing: A Definition The above QBP tactics do not cover all approaches to improving quality, but include those that purchasers could plausibly implement or cause to be implemented The goals of QBP tactics are to: Promote value-based competition among providers Where competition is not feasible, provide a direct stimulus to improve quality and value

28. Quality-Based Purchasing: A Definition There are other quality improvement approaches beyond a purchaser’s direct control: E.g., introducing guidelines for diabetes or disease management programs for heart failure Studies of these approaches are numerous and are NOT included in this review Purchasers might encourage such efforts, however, by agreeing on uniform standards, or supporting processes that consolidate conflicting guidelines

29. Qualtiy-Based Purchasing: A Definition In the review of the literature, we are NOT addressing interventions directed at patients/consumers (e.g., tiered pricing based on quality of provider) However, with AHRQ support, we are about to embark on summarizing that literature (stay tuned!)

30. Conceptual Considerations: Characteristics of the Incentive Characteristics of the incentive are likely to influence providers’ response. Some are obvious, such as: - the magnitude of a financial incentive - proportion of a provider’s practice to which the incentive is applicable

31. Conceptual Considerations: Characteristics of the Incentive Other characteristics of the incentive may be critical, but have received little attention, e.g.: - the direct cost of complying - the opportunity costs of complying - non-financial factors (e.g., reputational effects) - the presence of competing incentives or guidelines - expected timeframe for performance and stability of the incentive program

32. Conceptual Considerations: Factors External to the Incentive There may also be factors external to the incentive that influence providers’ responses Some may predispose a provider to respond (or not), such as: The general characteristics of the environment (e.g., FFS vs. capitation, number of other incentive programs offered, past relations between providers and plans or purchasers) The specific characteristics of the physician (e.g., age, work load, income relative to target)

33. Conceptual Considerations: Factors External to the Incentive There may also be factors external to the incentive that influence providers’ responses Some may enable or facilitate a provider’s response (or prevent response), e.g.: Organizational characteristics of the provider’s group (e.g., IT capabilities, interest in improving performance) Patient factors (e.g., education level, willingness to take on self-care)

35. The Conceptual Model: Implications In designing VBP strategies, one must consider not only the obvious issues about revenue potential of financial incentives, but also: Costs of complying with performance goals The potential of non-financial incentives (esp. public reporting and consumer education programs) Predisposing and enabling factors external to the incentive: general financial environment, provider traits, organizational effects, patient factors The same considerations are necessary when interpreting the literature on VBP

36. The Literature On VBP: Topics NOT! Covered For determining revenue potential: % of providers’ income from study patients The direct, opportunity costs of complying (or not) Most potentially predisposing factors, such as: general mix of reimbursement providers faced (e.g., % FFS vs. % capitation, number of other incentive programs offered) individual characteristics of the provider Organizational enabling/inhibiting factors

37. The Literature On VBP: Summary Fairly difficult to interpret and generalize However, some factors identified in the conceptual model do seem to matter Revenue potential (and certainty of gain) Costs and difficulty of meeting goals Enabling/inhibiting factors at the patient level

38. The Literature On VBP: Summary Other potentially important factors have not been studied Predisposing factors (general financial incentive environment, physician factors) Specific of costs and difficulty of meeting goals Enabling/inhibiting factors at the organizational level

39. The Literature On VBP: Summary Non-financial incentives, esp. public reports, seem as worthy of further consideration as financial incentives Caveat: provider interviews suggest that, without subsequent use of payment incentives, the response to public reports may wane; the positive studies reported here measured short term responses (Mehrotra et al, Health Affairs, 2003; 22(2):60) Even these tepid conclusions reflect our judgment and extrapolation, to some extent

40. The Literature On Financial Incentives: Summary Repeat for emphasis: There has been no research on the impact of organizational factors Why this is so important: Much of the priority setting for providers and most investments to improve come from the organization

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