/ Business / Payers and Providers Converge on Meaningful Use

Payers and Providers Converge on Meaningful Use

healthcare on January 23, 2014 - 3:22 pm in Business


Recently, four major commercial Payers announced programs aligning their Pay for Performance (P4P) initiatives with Meaningful Use (MU) compliance criteria. This is evidence of healthcare reform changing the US healthcare industry dynamics and reinforcing the forging of symbiotic partnerships between Payers and Providers towards achieving common objectives.

However, the extent of convergence of Pay for Performance programs of Payers with Meaningful Use adoption by Providers is still not clear. If demonstrating meaningful use becomes just one more criteria to be eligible for the same amount of P4P incentives, then it may not become a motivational factor for the providers to in EMR adoption technologies. On the other hand, additional incentives for demonstrating Meaningful Use along with compliance with Pay for performance criteria would be attractive for the providers.  The alignment of two programs can further be strengthened with a set of common measures required for compliance with Meaningful Use and Pay for Performance.

Integrating Pay for performance with Meaningful Use – A Welcome Move!

With the Patient Protection and Affordable Care Act (PPACA) resulting in 19 million uninsured getting coverage by 2014 and the number rising to 32 million by 2019, the payers will have to optimize their operations to offer low premium plans in competitive health insurance retail market. The health insurance companies can no longer place lifetime caps on coverage or deny coverage because of pre-existing conditions. They are also prohibited from dropping policyholders when they get sick. In the changed scenario, Payers can no longer rely solely on their care management team to manage healthcare costs of their high risk population. Hence the payers have started exploring collaborative disease management models with active participation from providers.  Providers need to invest in implementation or upgrade of certified Electronic Medical Record (EMR) system and demonstrate meaningful use to be eligible for ARRA HITECH Act EMR incentives. There is a general feeling amongst providers that the incentives are insufficient to cover the cost of EMR implementation and maintenance.

Hence, the payers extending a helping hand to providers in achieving Meaningful Use or incentivizing them for it will be a welcome move!

Commonality between the two initiatives:

Meaningful Use and Pay for Performance programs share common vision of improving quality of care and reducing healthcare costs by:

  • Improving patient safety and care coordination
  • Reducing health disparities
  • Engaging patients and their families in management of their health
  • Improving public health

For stage 1 meaningful use, Eligible Hospitals (EH) need to report on 15 clinical quality measures, 14 core objectives and 5 menu objectives selected from a set of 10. The measures are related to emergency department, stroke, venous thromboembolism, CPOE usage, drug interaction checks, recording vital signs, recording demographics, smoking cessation, patient outreach, care coordination, syndromic surveillance etc. For Eligible Professionals (EP), stage 1 meaningful use requires reporting on 3 core clinical quality measures, 3 additional clinical quality measures selected from a set of 44 measures, 15 core objectives and 5 menu objectives selected from a set of 10. Measures related to a wide range of conditions are covered by clinical quality measures for EPs like diabetes, asthma, pharyngitis, HIV, hypertension, cardio-vascular diseases and certain types of cancer. Core objectives for EPs are of similar nature to that of EHs. Payer P4P programs are designed around nationally-endorsed clinical quality measures like HEDIS or other measures that target preventive services, screenings for chronic illness, or delivery of recommended services for specific specialty conditions. Some P4P models are focused on promoting the adoption of IT and adopt structural measures like use of electronic medical records, electronic submission of claims etc. Payers have also started using commercially-developed episode grouper-based tools for resource use measurement in P4P programs. Comparing the nature of measures defined for MU compliance and those adopted for traditional P4P initiatives, it seems plausible to arrive at a common set of measures.

MU roadmap targets electronic data capture in Stage 1 criteria, increased use of clinical decision support in Stage 2 criteria and better clinical outcomes in Stage 3 criteria. While P4P targets enhanced clinic outcomes for reducing healthcare costs, meaningful use enforces demonstration of improved outcomes only in Stage 3 criteria which will be finalized in year 2015. Converging measures for MU and P4P programs will require extending the definition of MU measures to include clinical outcomes aspect required by P4P. For eg- Meaningful Use measure id NQF 0013 requires reporting the percentage of patient visits for patients aged 18 years and older with a diagnosis of hypertension who have been seen for at least 2 office visits, with blood pressure (BP) recorded. P4P program can extend this measure to mandate that a defined percentage of patients must have their BP under control. For some MU measures where a threshold for compliance is defined, P4P programs can push higher threshold level. For eg – Threshold of 50% for the MU measure “more than 50% of all unique patients age 2 and over seen by the EP or admitted to eligible hospital’s or CAH’s inpatient or emergency department height, weight and blood pressure are recorded as structured data” can be set to a higher % in P4P program.

Since, Pay for Performance and Meaningful Use programs share the common vision of improving quality of care and reducing healthcare costs, the convergence of both seems to be a great idea for the benefit of the healthcare economy. The integration is possible with the payers supporting additional incentives for meaningful use compliance by providers. The recommended approach is to go for shared benefits models which Accountable Care Organizations are piloting. To calculate savings, episode-bundling can be done to compare actual cost and risk-adjusted expected cost of the episode. In a simpler way, savings can also be calculated by Payers by comparing historical per member per month costs of a member group (with certain disease conditions) with the current per member per month costs. When savings surpass a certain threshold level, they can be distributed to providers as MU incentives based on their performance on various MU and P4P measures.

Critical Success Factors for the integration:

Implementing P4P programs integrated with Meaningful Use will certainly not be a cake-walk and will require meticulous planning. The critical success factors for such a program would be:

  • Business Intelligence capability of Payers to analyze historical data, predict future trends and simulate various P4P incentive models to design a pragmatic business case.
  • Selecting MU measures and metrics from their traditional P4P programs to arrive at a final set that has best potential for delivering cost savings.
  • Thorough ROI analysis leveraging research evidence to arrive at realistic estimates of cost savings from the selected measures.
  • A good estimate of cost of operations for integrated P4P and MU program including investments in provider network management to get provider buy-in and induce change in provider behavior.
  • Design efficient and effective processes to collect and analyze data required to measure provider performance and cost savings
  • Design an equitable incentives scheme that encourages provider participation in the program.


Convergence of Meaningful Use and Pay for Performance criteria has the potential to provide impetus to both these initiatives, if designed and executed thoughtfully. Providers can be more focused on ensuring compliance with converged set of metrics resulting in better outcomes and cost savings. A win-win financial model would involve payers passing back a portion of cost savings to providers as incentives for MU and P4P compliance.

About the Author

Seema Pandey: Principal, Insurance, Healthcare and Life Sciences, Infosys Technologies

Seema has more than 13 years of industry experience. She specializes in Healthcare IT consulting and solutions in Electronic Health Records, Disease Management, Hospital Performance Management and Health 2.0.

She is certified in PMP, HL7 and AHIP. She has published a paper on ‘Business Process Optimization in RHIOs.’

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