The Stead Health Group, Inc. - Components of Pay for Performance

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The Stead Health Group has expertise in Health Care Communication Transformations, Operations Improvement, Strategic Planning and Positioning, Financial Analysis and Turnaround, Program and Service Line Development, Facility Planning and Development. We apply strategy, customized to each client, resulting in tangible, bottom-line financial improvements.

Newsflash

The CMS said it will phase in a new weighting system for inpatient diagnosis-related groups over three years rather than fully convert to the cost-based system in 2007 as previously proposed. About 2% of hospitals will see their payments fall as a result of the new weighting system.

Components of Pay for Performance

Before introducing these programs, health plans attempt to develop a collaborative effort in which all healthcare stakeholders, including employers and providers buy-into the components of the P4P system. The various components of P4P should be discussed in length and in detail.

Ultimately, P4P systems must be a value-add for both health plans and providers. Health plans will have to justify the value of P4P programs by proving they are clinically relevant, offer incentives that improve margins, provider sufficient patient volume and use measures that are easily administered. Providers will be required to make investments, including re-engineering their operational processes, investing in clinical IT infrastructure, collect and report performance data.

Components	Description
Funding	Funding mechanisms must be accepted by all stakeholders. Health plans may choose to fund the systems through either new money or fess schedule increases.
Quality/Clinical Measure	All measures must be well-known and accepted by the physician community. All stakeholders must agree on a standardized method for the quality measure used as well as the method of data collection. In addition, stakeholders will need to assess whether the data for measure can be reliably collected and whether the collected measures can be linked to outcomes.
Incentives	A number of incentive payment approaches exist with varying degree of receptivity on the part of the provider and health plan. Health plans and providers must agree on the type and the amount of the incentives that will make an impact and change behavior.
Provider Administrative Challenges	Providers subscribing to several health plans in a given market may be resistant to enrolling in multiple P4P programs which have differing quality measures, incentives, etc. The future success of P4P will be based upon the industry’s ability to develop a single, standardized set of quality improvement guidelines.
Health Plan Administrative Challenges	Health plans must realize that P4P programs will increase their administrative burden. The following processes will be affected: data sources and business work flow processes, clinical decision support systems, budgeting ,accounting, marketing, network management, product design, provider communication and education, provider evaluation.

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