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Creative payment reform initiatives abound nationwide

Innovative programs, such as tying the payment system to the delivery system, could help bend the healthcare cost curve, according to Karen Davis, president of the Commonwealth Fund.

Speaking Wednesday at the 5th Annual National Pay for Performance Summit in San Francisco, Davis highlighted more than a dozen collaborative efforts around the country, illustrating what she called "a sense of richness out there."

"We are on a path of continued payment reform," she said, noting that the healthcare industry is moving away from a fee-for-service (FFS) model to a bundled payment model. The emerging payment models are expanding beyond pay for performance (PFP).

Davis credited the multi-stakeholder, nonprofit Integrated Healthcare Association (IHA) as an early pioneer in innovative programs. IHA's P4P program rewards provider performance based on quality and cost.

Bridges to Excellence began its provider bonus program in 2003. The Institute for Clinical Systems Improvement was founded by payer, provider and business groups in Minnesota to help improve patient care through collaboration and innovation in evidence-based medicine.

Blue Cross Blue Shield of Michigan's Physician Group Incentive Program takes 1 percent of payment updates and puts the money in a pool to reward physicians who improve quality of care. Thus far, the pool is at $70 million, Davis said.

The Centers for Medicare & Medicaid and Premier healthcare alliance have collaborated on the Hospital Quality Incentive Demonstration. CMS extended the project to test the effectiveness of new incentive models and find innovative ways to improve patient care.

Davis highlighted a handful of patient-centered medical homes, including those at Group Health Cooperative and the Geisinger Health System. The Commonwealth Fund, Qualis Health and the MacColl Institute for Healthcare Innovation are collaborating on a national initiative to transform safety-net clinics into PCMHs, she said. Meanwhile, Oklahoma is revamping its state Medicaid program into a PCMH model.

CMS has a Medicare gain-sharing demonstration project that rewards providers for success in areas such as reducing length of stay and improving hospital efficiency. The Medicare Health Care Quality Demonstration Program is working in Indiana and North Carolina, with the goal of improving patient safety and quality, increasing efficiency and reducing medical practice variations that impact quality and cost.

The Medicare Acute Care Episode Demonstration will provide global payments for acute-care episodes within Medicare's FFS model, Davis said. Medicare's Accountable Care Organizations focus on coordinated care, achieving a target rate of spending and sharing the savings as a bonus to Medicare providers.

"You need hospitals and physicians to work together to coordinate care and improve the transition in care," Davis said.

States are taking the lead with various projects. The Vermont Blueprint for Health collects funds from commercial payers to pay providers. The Rhode Island Chronic Care Sustainability Initiative is a multi-year pilot of a PCMH.

Under MassHealth, Massachusetts' Medicaid and commercial payers are collaborating on a global fee strategy, while Blue Cross Blue Shield of Massachusetts has developed an Alternative Quality Contract, which includes global payment and bonuses for quality.

Sponsored by the Robert Wood Johnson Foundation and developed in 2006, Prometheus Payment goes beyond pay for performance. It pays for and rewards individual, patient-centered treatment plans.

The real challenge for the future, said Davis, is trying to harmonize private and public provider payment and move toward a rational payment system. In the meantime, the industry is at least building the information base and investing in innovation, she said.

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