Program links financial, nonfinancial incentives
Combination seen as most effective quality strategy
What types of incentives are most effective in improving quality: financial incentives, or nonfinancial incentives? According to the Washington, DC-based National Health Care Purchasing Institute, part of the Academy for Health Services Research and Health Policy, the answer is "both."
"They are most effective when used in combination," says Sarah R. Callahan, MHSA, deputy director of Rewarding Results, a new initiative of the Princeton, NJ-based Robert Wood Johnson Foundation and the Oakland-based California HealthCare Foundation, and senior manager of the Academy for Health Services Research and Health Policy. The National Health Care Purchasing Institute administers the program, the evaluation of which will be co-funded by the Agency for Healthcare Research and Quality and the Robert Wood Johnson Foundation.
Several incentive models used
The $8.8 million initiative is designed to help employers, health plans, and state Medicaid agencies develop and implement incentives to reward physicians and hospitals for higher quality. Initially, it will use 11 incentive models. The financial incentives will include:
- quality bonuses;
- compensation at risk;
- performance fee schedules;
- quality grants;
- reimbursement for care planning;
- variable cost sharing for patients.
The nonfinancial incentives will include:
- performance profiling;
- publicizing performance;
- technical assistance for quality improvement;
- practice sanctions;
- reducing administrative requirements.
The bonuses, either a set dollar amount or a percentage of total compensation (5% to 10%), will be guaranteed to providers after a certain measure is achieved. "Alternatively, the provider or employer might set aside a large pool of funds, to be disbursed if a predetermined performance threshold is reached," Callahan says.
In most cases, standard performance measures such as the Health Plan Employer Data and Information Set or the Consumer Assessment of Health Plans, which already are widely accepted, will be used. If none exists for a specific target area, participants may create their own measures. Whatever measures are used, "Viable incentives share certain characteristics," Callahan says. "They should target areas that are priorities for the organization that is setting them, such as care management for diabetics. They also need to be easily understood and measured."
The source of data and the methodology also must be agreed upon. "That’s why using things that are already out in the public domain and accepted is preferable," Callahan explains. When new areas must be addressed, she adds, it’s especially important to get all the stakeholders together in setting the measures.
Nonfinancial incentives such as publicizing performance can be equally effective. "You could call them indirect financial incentives, because by publicizing results it could cause a change in volume," Callahan notes. "Transparency of information is key; the providers need to understand that they are making decisions that affect the quality of care patients are likely to receive."
The reduction of administrative burdens is another attractive incentive. "If you set it up so that a provider organization that meets a certain level of measures doesn’t have to do some onerous paperwork, that may in some ways be as useful as additional financial compensation," she observes.
But will it work?
Do the sponsors of Rewarding Results know that these types of incentives work based on similar programs, or are they looking to prove a theory? "Actually, it’s a little bit of both proof and theory," Callahan says. "It’s a program looking to show over a three-year demonstration period that by aligning the financial and nonfinancial incentives in a way that makes sense for people, you will improve quality of care. We assume doctors want to provide quality, but right now the incentives are so perverse for them. They are currently not incentivized to do e-mail care messages, for example. If we change the incentives so it makes sense to do care management, they can do the right thing and not hurt their practice."
It might seem like a good thing for hospitals to get people well and out of their beds faster, but they may lose revenue by doing that, Callahan adds. "It’s not surprising that people don’t choose to do things that hurt them," she says. "We’d like to see the reimbursement system aligned in such a way that people will do the right thing. We’re looking to demonstrate that financial and nonfinancial incentives, aligned in the right way, can improve quality. Then, we’d like to see this replicated and reproduced beyond the final set of grantees we are going to have."
Applications to participate in Rewarding Results will be open until May 31. Interested organizations can visit www.nhcpi.net, to find information on the call for proposals, detailed selection criteria, application forms, a resource page, information about the incentives, and frequently asked questions.
For more information, contact: Sarah R. Callahan, MHSA, Deputy Director, Rewarding Results, Senior Manager, Academy for Health Services Research and Health Policy, Washington, DC. Telephone: (202) 292-6700. Fax: (202) 292-6825. E-mail: [email protected].
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