Medicaid measures performance: The push to improve care and save money

More states are creating programs to track and reward physician care of Medicaid enrollees.

By Doug Trapp — Posted Aug. 6, 2007

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Private health plans' push for pay-for-performance and Medicare's first steps in that direction have garnered much attention. But the trend isn't confined to these two sectors. State Medicaid agencies have quietly entered the game in an effort to try to improve enrollees' care.

As of mid-2006, at least 28 states had 35 Medicaid pay-for-performance programs. Two were specifically designed for primary care physicians, although others involve doctors.

Physicians can expect to see more initiatives. In the next two years, at least 34 states are planning 47 new programs, including nine directly involving primary care doctors, according to a recent report by the Commonwealth Fund.

However, doctors shouldn't expect to see a tidal wave of comprehensive changes because most programs have tailored goals, such as improving childhood immunization rates and care of patients with chronic diseases, or controlling costs.

That narrow focus is partly due to a lack of evidence-based standards for children, said E. Susan Hodgson, MD, chair of the American Academy of Pediatrics' Steering Committee on Quality Improvement and Management. About half of Medicaid enrollees are children.

Many states are using or customizing the National Committee for Quality Assurance's Healthcare Effectiveness Data and Information Set measures. HEDIS standards mostly focus on adult care.

The Alliance for Pediatric Quality, formed in 2006 by four pediatric organizations, is working to fill the standards gap. The alliance, which includes the AAP, is developing evidence-based standards for children and electronic medical records compatible with children's care.

Even with their narrow focuses, existing pay-for-performance programs offer physicians a preview of some of the issues they might face as these initiatives expand.

Alabama's bonus

Most states don't yet have a fully developed pay-for-performance program linked to actual patient outcomes. Instead, they typically use process measures, which show, for example, physicians' scores on immunization rates; structural measures, which show, for example, if a practice is open on weekends or uses information technology; and efficiency measures, which show, for example, use of generic drugs and utilization rates.

In Alabama, the decade-old Patient 1st program tracks doctors' generic drug prescription rates, number of office visits and emergency department admissions rates. About 1,000 participating physicians provide medical homes for nearly 400,000 Medicaid enrollees and can receive up to $2.60 per patient per month if they meet certain accessibility standards, such as being available by phone 24 hours a day.

Participating doctors saved the state $11.5 million for the 12-month period ending in March 2006. The funds were divided between doctors and the Medicaid program. Physicians received average checks of $6,000, said Cary Kuhlmann, executive director of the Medical Assn. of the State of Alabama. MASA hasn't endorsed the program, but has worked with the state's Medicaid agency on it.

One issue with Patient 1st is that it doesn't address patient outcomes, Kuhlmann said.

Boyde Harrison, MD, a rural family physician, said the measures weren't an influence on his methods. His most recent check was for $2,000, which he considered more of a bonus for treating Medicaid patients than a performance incentive. "I didn't pay any attention to the parameters. I treated my patients in my usual way," said Dr. Harrison, who has a solo practice in Haleyville, 80 miles northwest of Birmingham. About 30% of his patients receive Medicaid.

The state plans to address quality of care with a $7.6 million federal transformation grant awarded in January. The money will help the state develop a quality improvement model and create an electronic health information system linking Medicaid, state health agencies, physicians, hospitals and private payers.

Worth the time?

For physicians to participate in a pay-for-performance program, they have to believe the reward will be worth the effort.

A 2-year-old Medicaid program for physicians in mostly rural Pennsylvania -- the Access Plus Pay For Performance Program -- is already considering an expansion, although its managers are still trying to sign up more physicians who have low Medicaid caseloads.

McKesson -- a private health care services company managing the program -- has paid more than $500,000 in state incentive dollars to physicians since 2005 in the state's 42 mostly rural counties that don't have mandatory Medicaid managed care. Awards are based on physicians' Medicaid caseloads and whether patients followed physician instructions.

The program focuses on physicians' management of five major diseases: asthma, chronic obstructive pulmonary disease, coronary artery disease, diabetes and heart failure, said Gus Geraci, MD, a family physician and a senior product manager at McKesson. Local medical societies helped design the measures, which have produced initially positive quality and savings results. Dr. Geraci plans to publish the results.

"One of the challenges that we will have is to get doctors to enroll and fully participate in the program," Dr. Geraci said. Physicians assume Medicaid pay-for-performance is going to require more work than it's worth, especially if a physician only treats a few Medicaid patients, Dr. Geraci said. The 867 physicians who agreed to join the program as of July 1 represent two-thirds of physicians with 10 Medicaid patients or more, but only 20% of eligible physicians overall.

McKesson has $1.5 million in additional dollars designated for incentive payments that it hasn't been able to give to doctors because of limited physician participation. The company is returning the money to the state.

Although the Pennsylvania Medical Society hasn't formally endorsed the program, it supports the primary care case management model, said Bernie Lynch, senior director of practice economics. McKesson hopes to expand the program to include other measures.

No doctor wants to be last

Putting money in physicians' pockets isn't the only incentive Medicaid agencies are using. Competitive ranking also can motivate doctors.

"Money is OK, but that's not nearly as powerful as how you compare with your peers," said Thomas McInerny, MD, a member of the AAP's quality improvement steering committee.

North Carolina is an example of a performance program that skips the pay. Doctors receive bimonthly rankings comparing them with other area physician practices as a whole on six standards: asthma and diabetes management, pharmacy costs, patients' emergency department use, care for high-cost and high-risk patients, and congestive heart failure. The comparisons are not released publicly.

The rankings come from Community Care of North Carolina, a collection of 14 primary care Medicaid case-management networks, each with physician input. The program's precursor began in 1991 as a way to provide medical homes to Medicaid enrollees. Now about 750,000 of 1.65 million beneficiaries have medical homes through 3,000 primary care physicians in the networks.

Although participating physicians aren't paid strictly for performance, they receive a $2.50 per-patient monthly care-management fee and help with coordinating care from case managers hired by the networks.

North Carolina worked closely with physicians in developing the networks, said Steven E. Wegner, MD, president of Community Care of North Carolina. "If you can help [doctors] get the information and show them ways to improve, I think they will respond."

The North Carolina Medical Society "wholeheartedly" supports the effort, said spokesman Mike Edwards.

Over the last several years, physicians as a whole have improved by 20% to 25% on all of the program's process measures, such as giving flu shots to asthma patients, Dr. Wegner said. The state is in the process of updating its estimates, but between 2000 and 2002 improvements in asthma care saved the state $2 million and better diabetes care saved $3.3 million, said William Lawrence Jr., MD, senior deputy director of North Carolina Division of Medical Assistance.

The next statewide step is a universal quality reporting initiative backed by Gov. Mike Easley; it was expected to be announced in July or early August.

Physician understanding is key

Sometimes making sure doctors understand a pay-for-performance plan is as important for success as offering the program in the first place.

That's one possible conclusion from an analysis of five Medicaid health plans' efforts to boost physicians' well-baby care in California from 2003 to 2005. The study, published in Health Affairs in late June, included 2,400 physicians who treated 61,800 children.

The five health plans offered doctors $50 to $200 in bonuses for achieving the HEDIS standard of conducting six well-child visits for patients by the time they reach 15 months of age.

The plans' scores for meeting the well-baby standard improved by a two-year average of 7.5% to 27%, depending on the plan. The percentage of physicians meeting HEDIS standards increased from 35% to 74% in the health plan with the best results.

Ten of 14 physicians in that top-scoring plan spoke positively about its physician outreach -- a higher ratio than for plans that showed smaller increases.

Ideally, these kinds of performance incentives should reward physicians who improve their scores -- whether or not they already provide high standards of care -- in order to improve the entire bell curve, Dr. McInerny said. "Then you keep moving that curve year by year," he said.

Things can get complicated

Even pay-for-performance programs with physician support can go astray. Maine's effort to compensate doctors for disease management has been struggling since the state installed a new claims processing system in 2005.

Maine's program, which began in 2000, provides $2.7 million in annual performance payments to physicians. The incentive is based on doctor accessibility, patients' emergency department visits, other quality standards, plus the number of Medicaid patients the doctor sees.

Initially, doctors were enthusiastic about the possibility of boosting their low Medicaid pay, said Kevin Flanigan, MD, Maine Medical Assn. president. The MMA didn't officially endorse the program. Over time, Dr. Flanigan and others realized their electronic health records didn't match state performance data, which came from claims.

"There was no way to correlate their numbers with yours," Dr. Flanigan said.

A new state claims processing system never worked properly and has been abandoned, said Brenda McCormick, director of the division of health care management for Maine Medicaid. She said another system is expected to take its place in several months. The state still pays for performance, but the check amounts haven't changed in two years.

The MMA still supports pay-for-performance as long as physicians help design the standards and there's enough infrastructure to support it, Dr. Flanigan said.

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Carrots and sticks

The growth of pay-for-performance programs isn't confined to the private sector. New results from a survey of state Medicaid directors show they are in on the trend. The poll was conducted from May 2006 to October 2006.

Existing programs New programs
Who's targeted
Managed care companies 20 14
Primary care case management 5 2
Nursing homes 3 3
Other 3 2
All health professionals/institutions 0 2
Primary care physicians 2 9
Behavioral health programs 2 3
Hospitals 1 4
Clinics 0 1
Common standards and measures
HEDIS or similar standards 69% 57%
Structural measures* 60% 70%
Cost and efficiency standards 37% 21%
Surveys of patient experiences of care 20% 18%
Medical records-based 11% 6%
Common incentives
Financial bonuses 69% 52%
Financial penalties 34% 7%
Differential reimbursement rates/fees 31% 44%
Auto-assignment of patients to high performers 14% 15%
Withholds of performance funding 9% 15%
Grants for quality improvement programs 3% 22%
Definitions of success
Attainment of standard/benchmark 85% 91%
Improvement above baseline 33% 55%
Peer comparisons 21% 9%
Improvement/attainment combined 9% 41%
Conditions and procedures monitored
Immunizations 43% 18%
Asthma 39% 27%
Other chronic conditions 39% 50%
Cancer screening 29% 9%
Behavioral health 21% 41%

Note: Some states have more than one pay-for-performance or quality program. Some states have existing programs and also are planning new ones. Structural measures category includes accreditation, health IT adoption, weekend hours, appointment wait times

Source: "Pay-for-Performance in State Medicaid Programs," The Commonwealth Fund, April

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Measuring Medicaid doctors

At least 43 states have or are considering pay-for-performance programs in an attempt to improve care for Medicaid enrollees. Some existing programs with a physician focus:

Alabama: Primary care physicians who prescribed more generic drugs and lowered their patient hospitalization rates -- among other standards -- saved the state $11.5 million in a 12-month period ending in March 2006. The savings were split evenly between participating physicians and the Medicaid program.

Maine: The state provides $2.7 million to primary care physicians annually based on their accessibility to patients, patients' hospitalization rates and a number of quality measures.

Pennsylvania: The state set aside about $2 million over two years, starting in 2005, for a disease-management program run by a private contractor. The program is mostly for rural physicians who helped the state contact Medicaid beneficiaries and improve their chronic disease management and lead-testing rates, among other measures.

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Medicaid enrollment

Children account for nearly half of Medicaid enrollment this year.
49.1 million total enrollment
23.5 million children
11.1 million adults younger than 65
5 million adults older than 65
8.5 million disabled children and adults
1 million from U.S. territories

Source: Centers for Medicare & Medicaid Services

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