USING FINANCIAL INCENTIVES TO INFLUENCE CLINICAL DECISION MAKING

S O R A Y A G H E B L E H , M P H T H E D A R T M O U T H I N S T I T U T E F O R H E A L T H P O L I C Y A N D C L I N I C A L P R A C T I C E

PROVIDER DECISION MAKING

-  Providers are a major component influencing healthcare outcomes and healthcare expenditures

-  The most expensive item in healthcare is the “provider’s pen” -  Resource utilization is determined by provider decision making -  Under the existing Fee-for-service (FFS) in healthcare:

HEALTHCARE REFORM

-  Healthcare reform aims to realign financial incentives with quality of care

-  The Institute of Medicine’s six aims for improving quality in healthcare include -  Safety, Effective, Patient-Centered, Timely, Efficient, Equitable

Requires financial incentives to be tied to quality metrics in order for providers to receive reimbursement for care

Incentives, however, need to be monitored and evaluated as prior attempts of using financial incentives to influence clinical decision making have not always been successful in improving quality for patients

WHAT ARE THE ISSUES?

(1)   Fee-for-service drives high healthcare costs because providers are incentivized to perform more services without necessarily improving quality of care

(2)   Magnitude of financial incentives that can potentially be introduced makes determining the appropriate incentive difficult

(3)   Replication of successful results across the numerous settings available for healthcare service delivery is not assured

(4)   Applicability of incentives that may work in a large provider system may not translate to a solo or small group practice

(5)   Protecting practices that cannot transition towards integrated delivery that requires high-start up capital and advanced healthcare technology

(6)   Numerous stakeholders need to collaborate for successful incentive programs that include providers, insurance companies, beneficiaries, and government agencies

WHY ARE FINANCIAL INCENTIVES IMPORTANT?

-  Providers are the target population for financial incentive models in healthcare

-  Potential implications with regard to ethnicity, geographical location, and cultural background of participating providers

-  Distinctions between providers that work in self-owned practices and small group practices compared to those in large provider networks or accountable care organizations

KEY DETERMINANTS

Biology Behaviors Social Environment

Physical Environment

Policies and Interventions

Access to Quality

Health care

Many key factors determine which, if any, incentives should be utilized in improving the quality of care being delivered by providers

KEY DETERMINANT - BIOLOGY

Biological makeup of providers varies widely and can directly affect how they respond to financial incentives to deliver care

Specific indicators include:

• Age of the physician • Where the physician went to school and trained • Gender • Religious Background and Upbringing • Value System • Ethnic Background • Socioeconomic Status • Personal Bias

KEY DETERMINANT - BEHAVIORS

Provider behaviors implicated in decision-making include:

• Prescribing habits • Personal work ethic and the amount of preparation time • Average number of tests physician typically orders • Physician self-monitoring • Personal spending habits • Size of the workload the physician takes on

The target income level of the provider will affect whether a financial incentive will be an important factor, tying into family financial obligations

Implicit assumption in medicine that all providers practice in the best interest of their patients

KEY DETERMINANT – SOCIAL ENVIRONMENT

Different Provider Settings

• Hospitals • Clinics • Ambulatory Care Centers • Offices • Nursing Homes • Skilled Nursing Facilities • Community Health

Centers

-  Provider settings dictate the structure and magnitude of incentive given to the provider

-  Organizational structure and culture of the provider setting can affect the success of incentives

-  The proportion of the group to which the incentive is applied is relevant

KEY DETERMINANT – PHYSICAL ENVIRONMENT

-  Provider access to necessary tools for quality improvement is crucial

-  Providers practicing in rural or impoverished areas may have different responses to incentives compared to providers practicing in urban or higher income locations

-  Different geographic locations are tied with different patient populations who have different diseases and can determine the way providers react when providing care

KEY DETERMINANT – POLICES & INTERVENTIONS

Structure of the incentive affects provider participation

Government policy factors include government insurance reimbursements from Medicare and Medicaid

Provider adherence to clinical guidelines set by academic institutions and what the status quo of quality provision is among a provider community are indicators of the

likelihood of incentives working within that provider community

Healthcare reform will have huge implications for providers if methods of reimbursement change and shared savings and accountable care models begin to

dominate the healthcare arena

KEY DETERMINANT – ACCESS TO QUALITY HEALTH CARE

Lack of reimbursement to providers and healthcare settings that see patients who are underinsured or have no insurance often leads to an increase in over-testing, over-prescribing, and over-diagnosing of patients who have more reliable insurance or the

ability to pay. Providers don’t necessarily need incentives to provide increased access to quality care but under current

reimbursement schemes, providers have more of an incentive to increase quantity and this has increased the cost burden.

WHAT NOW?

Financial incentives should be used in defined settings for defined problems within defined populations where measurable results can be produced

indicating a movement towards a desired improvement in quality.

LARGE AND SMALL PROVIDER SETTINGS

Large Provider Settings

Can assume more risk

Higher capabilities for infrastructure and

technology implementation

Larger pool to measure

performance improvement and

quality metrics

Provider buy-in and active participation is more likely in a larger

setting

Potential to participate in shared savings models and

accountable care

Large and Small Provider Settings Absolute

threshold, directly measurable incentives

Vaccinations Reduced repeat unnecessary lab

tests

Increased screenings and

preventative care initiatives

CHARACTERISTICS TO CONSIDER

-  Interventions of any kind should be explicitly described and known to providers so they are aware of what entity is paying for the intervention

-  Determining short-term goals compared to long-term goals is important when coming up with metrics of success for the incentive

-  Metrics to be considered for any incentive program should include the provider population providing the data, percentage of patients being targeted for the incentive, expected overall effects of the incentive, and the type of feedback given

-  Financial risks and penalties can be used to influence and change physician behavior as well

-  Organizational pressure can either increase or decrease intrinsic motivation to perform depending on the environment, setting, and culture

CONCLUSIONS

Financial incentives are not going anywhere and will continue to be implemented in a variety of healthcare

settings. In order for these incentives to be utilized properly, the healthcare community needs to understand that financial incentives and reimbursement strategies

are provider and setting specific and they must implement incentives accordingly.