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For Some Midwesterners, Pay-for-Performance is Paying Off

April 9, 2015
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If this were the journey to Oz, the pay-for-performance, value-based reimbursement method of healthcare would have just reached the Scarecrow. 
In other words, it has a long ways to go. 
We’re getting there though. The passing of a repeal of Medicare’s Sustainable Growth Rate (SGR), which would implement the Merit-based Incentive Payment System (MIPS), a consolidation of current Medicare value-based payment models, would be a huge boon to value-based care. It would incentivize providers to move into value-based payment models, presenting a five-percent bonus for entering an accountable care organization or patient-centered medical home (for more on this read Mark Hagland’s excellent interview with Premier Inc.’s Blair Childs). 
Still, potential is not the same as reality. If the SGR repeal passes, it will be years before the MIPS reform has a substantial impact. In today’s world, we’re even farther than behind. Many physicians are struggling with alternative payment models. A recent report from the RAND Corporation found that they need helping managing increasing amounts of data and figuring out how to respond to the diversity of programs and quality metrics from different payers.
Those that are making inroads are mostly doing it in accordance with their traditional fee-for-service reimbursement. 
That’s why I was encouraged to see a pair of studies in Health Affairs this month on how value-based incentive programs affected quality and cost. The studies, one of a health system-led program in Minnesota and another of a payer-led effort in Michigan, are proof that incentive-based care is working, to a degree. Certainly, in both cases, the initiatives haven’t led to wholesale changes yet. Like I said, we’re still at the Scarecrow, but in both cases improvements are there. 
We’re moving in the right direction on the Yellow Brick Road. 
Let’s start with Minnesota first, since that one is a little more complex. A research team looked at how the impact of a quality-based incentive program at Fairview Health Services, a health system that has created an accountable care organization (ACO) with 44 participating primary care clinics, from 2010 to 2012. What they found is that while Fairview improved in quality-of-care measures over the two-year period, it didn’t improve at a rate that was greater with comparable Minnesota medical groups. However, the incentive program—which was 40 percent of the physicians’ total compensation—did lead to a significant improvement for providers who were originally in the lower-third of baseline performance on quality metrics. 
Basically, those who were underperforming got better, thanks to the incentive program. It narrowed variation significantly. So while the overall program did not meet its quality improvement aim, and Fairview has since elected to decrease the compensation percentage , the results were encouraging. In fact, helping aid providers who are treating patients in socioeconomically-disadvantaged areas—which is exactly what many of those in the lower-third were doing—is a big win in my opinion. 
The results of the Michigan study are even better. Researchers looked at the quality and cost impact of Blue Cross Blue Shield of Michigan’s Physician Group Incentive Program. The program represents more than 19,000 physicians, more than 68 percent of active primary care physicians in the state, and offers up to 20 percent in increased reimbursement through patient-centered medical home components, including meeting various quality metrics. 
Researchers looked at quality and spending data for more than three million beneficiaries from 2008 to 2011. For those beneficiaries whose providers were in the program, the results showed a decrease in spending for adults and children as well as improvement on 11 of 14 quality measures. When compared to nonparticipating physicians, those in the incentive program were significantly ahead on three of the quality metrics. Overall, the researchers say the effect of the quality incentive program was positive.
The journey to Oz (in this case, a healthcare environment where rewarding value is the norm) is still fraught with plenty of challenges. Health IT systems will have to better integrate various claims and clinical datasets and spit out something that providers can use. This, we know, is a work in progress. The culture of value-based care also is something that will have to improve, as the RAND report indicates.  
It takes years to complete a change this drastic. It’s just nice to see that in some areas of the country, examples of progress abound. 
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