value based pay for performance · note: trends shown in the chart are the 2012-2013 cost trend;...

Value Based Pay for Performance

Lindsay Erickson

Pay for Performance Summit | March 2, 2015

Copyright © 2014 Integrated Healthcare Association. All rights reserved. 2

Objectives

� IHA & California P4P

� Value Based P4P design and development

� Observations as we go live

IHA & California P4P

Program

3Copyright © 2014 Integrated Healthcare Association. All rights reserved.


Pay for Performance Program in California

10Plans

200Medical Groups

and IPAs35,000 physicians

$500mpaid out

9 Million Californians


Core Program Elements

A Public Report Card Public Recognition Awards

Health Plan Incentive PaymentsA Common Set of Measures

The California P4P program aims to create a compelling set of

incentives that will drive improvements in clinical quality, resource

use, and patient experience through:

2003 2009 2011 2013 20142007


Program Evolution

Appropriate Resource

Use measures added

Value Based P4P – Quality and Resource Use

integrated into single incentive program

Payment for Improvement

added – Quality only

Total Cost of Care

measure added

First payments for

Value Based P4P

First Measurement

Year – Quality only


Transition to Value Based P4P

� Emphasis on quality

improvement

� Separate incentives for quality

and resource use

� Standardizes health plan quality

measures and payment

methodology

P4P Classic

� Emphasis on affordability and

value

� Combined incentive for quality

and resource use

� Standardizes health plan

resource use measures, as well

as quality measures and

payment methodology

Value Based P4P

Value Based P4P design &

development



Value Based P4P Overview

� Quality Gate

� Total Cost of Care Trend Gate

Does the PO

qualify?

� Resource use compared to prior year

� Selected inpatient, outpatient, ED, and

prescribing measures

Did the PO

improve?

� Net savings for all ARU measures

� Quality determines share of savings

How much is

the PO’s incentive

payment?



� Quality Gate


Does the PO

qualify?




Did the PO

improve?

� Net savings for all resource use measures


How much is


payment?



� Quality Gate


Does the

PO qualify?




Did the PO

improve?

� Net savings for all ARU measures


How much is


payment?


� Performance gates

• Quality

• Total Cost of Care Trend

� Calculate share of savings

based on resource use

� Adjust share of savings

for Quality

� Sum adjusted shared savings

Value Based P4P Design

Step 1a – Quality GatePO does not qualify

for value Based P4P

incentive

Step 1b – Total Cost of

Care Trend Gate

PO does not qualify

for value Based P4P

incentive

Step 2 – (repeat for each ARU measure) –

Calculate Base Incentive Amount using

Appropriate Resource Use (ARU) Measures

Step 3a

Apply Quality Adjustment to base

Incentive Amount

Step 4

Sum Incentive Amounts across ARU Measures;

negative amounts offset positive amounts

Value Based P4P

SHARED SAVINGS INCENTIVE

no

no

yes

yes


To earn ANY award:

� Meet minimum level of quality

� Below TCC trend gate

� Net improvement on resource

use measures

To MAXIMIZE award:

� Greater resource use

improvement

• Complete diagnosis coding

and risk capture

� Higher quality

Value Based P4P Drivers

Step 1a – Quality GatePO does not qualify

for value Based P4P

incentive

Step 1b – Total Cost of

Care Trend Gate

PO does not qualify

for value Based P4P

incentive

Step 2 – (repeat for each ARU measure) –

Calculate Base Incentive Amount using

Appropriate Resource Use (ARU) Measures

Step 3a

Apply Quality Adjustment to base

Incentive Amount

Step 4

Sum Incentive Amounts across ARU Measures;

negative amounts offset positive amounts

Value Based P4P

SHARED SAVINGS INCENTIVE

no

no

yes

yes


Modeling Shared with Stakeholders

Observations as we go live


0

10

20

30

40

50

60

70

80

90

100

Quality Gate

Copyright © 2014 Integrated Healthcare Association. All rights reserved 16

Expect Most Will Meet Quality Gate

Ranked distribution of Physician Organization’s Quality Composite Score

Qu

ali

ty C

om

po

site

Sco

re

Quality Score for Maximum Multiplier


Expect Most Will Pass the Cost Trend Gate

Note: trends shown in the chart are the 2012-2013 cost trend; performance at the TCC Trend Gate is assessed using the lower limit of the 85%

confidence interval of the TCC trend. The 26.9 percent of plan-PO dyads (158 of 588 total across five health plans) that missed the 5.3% cost trend

gate are based on the confidence interval around trend; 46.1 percent (271 of 588 total) of plan-PO dyads had trends above the 5.3% threshold.

0

5

10

15

20

25

30

-25 -20 -15 -10 -5 0 5 10 15 20 25

2013 TCC Trend Gate = 5.2%

Total Cost of Care Trend, 2012-2013 (%)

Nu

mb

er

of

Pla

n-P

Os


Expect Those That Pass Gates to Earn 40-

50% of Any Savings

0%

5%

10%

15%

20%

25%

30%

35%

40%

Did Not

Pass Gates

32.5% 35% 40% 45% 50% 55% 60% 65% 67.5%

Passed Both Gates

Missed Both Gates

Missed Quality Only

Missed TCC Trend Gate

Quality

Composite

Score

N/A 10-14 15-23 24-32 33-42 43-51 52-60 61-69 70-74 75+

Pe

rce

nt

of

Pla

n-P

Os

Quality-Adjusted Share of Savings


Varied Resource Use Trends

-1.3%

4.5%

1.7%

3.1%

-6%

-4%

-2%

0%

2%

4%

6%

Inpatient Bed Days Readmissions (IRN) ED Visits Generic Prescribing

2009-2010 2010-2011 2011-2012 2012-2013

% C

ha

ng

ein

P

4P

Po

pu

lati

on

Ra

te

Decreases=Improvement Increases=Improvement


Learnings

� Importance of stakeholder involvement and engagement

� Definition and understanding of value is constantly evolving

� Performance target not as clear with resource use and cost

� Balancing act between simplicity and methodological rigor

“It is good to have an end to journey toward; but it is the

journey that matters, in the end.” – Ernest Hemingway


Tangerine

Falls

Thank you!

Lindsay Erickson

[email protected]


value based pay for performance · note: trends shown in the chart are the 2012-2013 cost trend;...

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