Pay for performance is coming to pharmacy

April 14, 2008

The Centers for Medicare & Medicaid Services will start reporting pharmacy performace as early as this fall and drug plans my start publishing reports in the near futugs.

The Centers for Medicare & Medicaid Services may start publicly reporting pharmacy performance in drug plans as early as this fall, according to David Nau, director of Pharmacy Quality Alliance. At the same time, drug plans may start publishing pharmacy performance reports in the near future, he said.

"Models based on current performances are good for top performers, but may not motivate lower performers to do better," Nau explained. He is concerned that the "perfect system" for P4P has not been perfected yet and different models will be tested in the near future. It is possible that certain drug plans, after seeing the performance data, could remove a low-performing pharmacy, he added.

P4P is based on the belief that if you offer a financial incentive to health providers, their job performance will improve. Humana has already handed out bonuses to pharmacies that do a better job of dispensing generic drugs, Nau said.

CMS funded a P4P demonstration project to improve medical care at 266 hospitals. It was coordinated by Premier, Inc. The hospitals' quality of care was assessed by 30 measures in five specific areas, including joint replacement, heart failure, and pneumonia. Bonuses totaling $8.7 million were paid out and the top hospital received $744,000. According to Nau, medical care quality improved at those hospitals over a three-year period.

With that success, the Pharmacy Quality Alliance (PQA) was formed two years ago and includes several organizations to help set standards.

The PQA has now developed adherence measures for seven drug classes: beta blockers, calcium-channel blockers, angiotensin-converting enzyme inhibitors/angiotensin receptor blockers, lipid-modifying agents, sulfonylureas, biguanides, and thiazolidinediones, Nau said. He described some of the measures that are being used. One was a significant gap of 30 days or more in a failure to administer medication. Another example was measuring a certain percentage of diabetes patients receiving an oral antihyperglycemic agent at higher than the recommended daily dose.

"The Institute of Medicine has studied P4P models and recommends that financial incentives be based on a combination of 'improvement' and 'current performance'," Nau said. The way it works now, providers compete against one another and those that score in the top 20% get a bonus under the tournament model. Under the threshold model, providers are paid a bonus based on surpassing a minimal threshold of performance. "The bonus may be weighted by the number of patients," Nau said.

Under the improvement model, providers may receive a bonus based upon their improvement from the previous measurement period. "The bonus could be based on achieving a minimal level of improvement by getting a fixed bonus based upon achieving at least 10% improvement," Nau said.

He cited how a hypothetical pharmacy P4P would work. On medication adherence for 200 patients, its score in 2006 was 60% and moved up to 70% in 2007. The incentive payment of $2,000 was paid based on a formula of $1 per patient multiplied by the number of patients and then multiplied by 10%-the amount of the percentage increase.

Nau said PQA's long-range goals are to develop and test P4P models in ambulatory pharmacy and to determine which ones are the most useful.