An Environmental Scan of Pay for Performance in the Hospital Setting: Final Report. An Environmental Scan of Hospital Pay for Performance

11/01/2007

The DRA required the Secretary of the DHHS to consider the following design elements when developing the VBP plan: (1) the process for developing, selecting, and modifying measures of quality and efficiency; (2) the reporting, collection, and validation of quality data; (3) the structure, size, and source of value-based payment adjustments; and (4) the disclosure of information on hospital performance.  The CMS Hospital VBP Workgroup was delegated the task of developing the VBP plan for Medicare hospital services.

To inform the development of the VBP plan the Assistant Secretary for Planning and Evaluation (ASPE) and CMS issued a contract to the RAND Corporation to conduct an environmental scan of the hospital P4P landscape.  The environmental scan, conducted between August of 2006 and June of 2007, included:

  1. A review of the literature to assess what is known about the impact of P4P and how various design features influence the effectiveness of these interventions.  The review examined the hospital inpatient and outpatient P4P empirical literature as well as theoretical literature drawn from the economics and management disciplines regarding the use of incentives and behavioral responses; 
  2. Discussions with key informants to provide a picture of the current state-of-the-art in hospital pay for performance program design and to draw upon the experiences and lessons learned from existing P4P and P4R initiatives; and.
  3. A synthesis of the findings from the environmental scan to inform the discussions and design considerations of the CMS VBP Workgroup.

To take advantage of the experimentation going on nationally with respect to P4P program design and implementation, discussions were held with 27 program sponsors, 28 hospitals, 7 hospital associations, 5 data support vendors, and a number of individuals with expertise in rural hospital issues.  The discussions were necessary because this type of descriptive information and this level of detail about program design are not typically contained in peer-reviewed journal articles that summarize the results of P4P interventions. Additionally, many of the demonstration experiments are still in their infancy, and little has been formally documented about the related experiences.  This report summarizes the findings from the environmental scan.

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