Editor’s note: This is the second in a series of articles on topics being presented at the Symposium on Regulatory Issues for Management in Long-Term Care (SORIM LTC).

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ith more than 30 million Americans enrolled in private health plans with Pay for Performance (P4P) programs and Centers for Medicare & Medicaid Service (CMS) demonstration projects underway, P4P has become a hot topic in healthcare circles. What remain to be seen, however, are the implications of P4P (ie, programs offering financial rewards to providers whose care meets certain measures intended to gauge quality and cost-effectiveness) on long-term care facilities. How will it be structured? What will it measure? How will it impact the bottom line? To shed light on these questions and more, ECPN recently spoke with Marilyn Ellicott, RN, CPHQ, a senior clinician for Misys Healthcare Systems who has worked in software for development for 10 years, on her impressions thus far of the development of P4P in home care and how it will ultimately affect long-term care.

       ECPN: What’s the basic premise of P4P?

       Ellicott: With P4P, organizations that perform better will get paid more. The overall rationale is based on the rising cost of healthcare and what can be done to hold that down. It is immaterial if the rise in cost is from prescription drug costs, aging Baby Boomers, or adverse events in the care process. The key is how P4P will be structured.
       Everything we’ve read and seen lately pushes us toward P4P, but there’s still a lot to be determined in how P4P will actually work. Issues to be resolved include pay structures, the methodology behind the pay structure, the outcomes used, etc. The basic concept is that the organization’s performance will be measured on a specified set of healthcare outcomes. Of course these outcomes have to be valid and reliable and allow for risk adjustment. When the agency payment is based on clinical outcomes, the responsibility and accountability for data and information is pushed to the front-line staff level. This in turn creates other issues, such as staff education and training.
       Many home care agencies lose money under the current Prospective Payment System (PPS) because the admitting staff are still having problems appropriately identifying the patient’s Outcome and Assessment Information Set (OASIS) status for the functional areas of activities of daily living (ADLs) and instrumental activities of daily living (IADLs). Although we’ve taught this for several years now, it’s not unusual to go into an agency and see it as a key area for reeducation.

       ECPN: Which data sets are key to P4P?

       Ellicott: In order to do P4P, you have to have valid, reliable indicators that put everyone on the same playing field. For home care, it’s OASIS, which was validated by hundreds of agencies before it was required to be used by all agencies as the mechanism to generate the Home Health Related Group (HHRG). Now, after several years of use across the nation, there is no doubt about reliability and validity. OASIS will be the basis for home care P4P. One would have to assume that the Minimum Data Set (MDS) will be the outcome-based method of establishing P4P in long-term care. The MDS’s validity and reliability have also been proven over time.

       ECPN: How similar do you expect the P4P information gathering to be in home care and long-term care?

       Ellicott: If we assume that the MDS and OASIS indicators will be the bases for P4P in their respective markets, then the information gathering will have many of the shared characteristics they have now, but with more emphasis on consistency and correctness. The CMS website allowing consumers to compare, evaluate, and select home care agencies is Home Care Compare. It has a similar arrangement for long-term care facilities called Nursing Home Compare. The one difference with long-term care, in my experience, is there aren’t as many point-of-care type electronics or as much of an information technology (IT) infrastructure.
       Since the onset of OASIS and the requirement that it be transmitted electronically, there has been a significant increase in the IT structure within home care agencies. There are many more agencies using point-of-care computers to collect and analyze the data in the patient’s home. An offshoot of OASIS is the industry-wide benchmarking now available. This comes with the requirement for agencies to have an annual Performance Improvement or Quality Improvement (QI) plan based on where they stand with these national benchmarks. However, the more IT infrastructure you put in, the more data you have. The more data, the more “What do I do with it?” types of questions. There can be a pile of paper and data on the floor that becomes overwhelming.
       CMS provides the national benchmarking to the agencies as well as to their websites, but their reports are usually about six months old when published. The data on the Nursing Home Compare and Home Care Compare are old. They show the way the organization performed six months ago. If P4P is based on where your organization is in relation to the rest of the nation, then you need current information, and you need to be able to act on it quickly. Organizations are looking to have the same sort of CMS analysis available so they can quickly look and see where they had low performance scores and make changes to the process to raise those scores for the next time.

       ECPN: What will be the specific financial ramifications of P4P?

       Ellicott: Right now it appears that the top third of the organizations will get 2% more payment, the middle third will get the anticipated payment, and the bottom third will get 1% less. What we anticipate is that we will lose some of the agencies in that bottom third, but it shouldn’t be as many as we lost with the start of PPS. I think the bottom and middle third will always be pretty fluid. Everyone is going to shoot for the top. There’s also talk about changing the outcomes every few years. A organization or facility may be doing well with wound care and emergent care [which are anticipated to be the two leading outcomes for home care P4P] and next year CMS may put in an outcome related to medication management, which the organization hadn’t been paying as much attention to.
       The focus is consistently on patient safety. Bad or negative outcomes causing emergent care are the hallmark items. As P4P moves closer, benchmarking companies are getting into predictive modeling. Organizations are now demanding more financial management reports answering the questions of “Where are we now?” and “How can we better manage our performance?” Earlier, it was, “I want to see where I am at the end of the month or quarter.” Now, they want to see where they are today along with where they will be at the end of the quarter. It seems that will translate to long-term care, too.

       ECPN: In what ways are home care agencies preparing for P4P?

       Ellicott: What we’re finding is that they are pushing the same things, such as staff accountability, by educating on outcomes and their affect on reimbursement. They tend to stress the same things because that’s what’s been out there from CMS. We see a lot of push toward looking at financial management reports and management wanting to know the average cost per patient per episode in a level of detail that includes not just the usual markers of length of stay/number of visits, discipline mix, and supply cost but variations in those numbers between clinicians. They’re looking for best practices that can be moved throughout the organization.
       The electronic health record (EHR) is the key to all of this. Regardless of how connected or not connected an organization may be, having that data and having the ability to get at it and combine it is critical. As is the ability to then share the data and resulting information. Also, organizations are trying to find out where they stand in relation to the rest of the country. Therefore, there is a quest for benchmarking on a grand scale.

       ECPN: Generally, how have organizations responded to the rise of P4P?

       Ellicott: I think they’re a little more accepting of it than they were with PPS. When PPS first came in and they had to use OASIS, there were people up in arms and whispering, “This isn’t fair.” But it’s been around long enough and has worked well enough. P4P seems like the next logical step. It gives organizations the reward that PPS does not. PPS gave them the extra workload. Now they see a way of getting a reward, too.

       For the latest on P4P implementation and programs, visit www.cms.hhs.gov.