New Payment Models

Physician Payment Reform: What it Could Mean to Doctors - Part 4: Prometheus Payment

Kenneth J. Terry, MA

September 07, 2010


Quick summary. One of the current experiments in payment bundling, Prometheus Payment rewards physicians for practicing efficiently and avoiding complications. Prometheus care teams negotiate all-inclusive case rates according to evidence-based guidelines for episodes of acute and long-term care.

How doctors get paid. Physicians are paid fee for service, which is a debit against the case rate. They can share a withhold if their team prevents avoidable complications.

Pros. Physicians stand to receive bonuses for high-quality, efficient care without being at financial risk.

Cons. Physicians need the infrastructure of a large organization to make this model work.

Where it stands. The private organization behind Prometheus is conducting four pilot projects across the country, and more are on the way.

Promising Despite Challenges, Experts Say

Prometheus Payment, a type of payment bundling that budgets for individual episodes of acute and long-term care, is attracting attention as several pilots go forward across the country. Its strength is that it's designed to promote clinical collaboration and coordination of care across specialties and settings of care, say some observers. Whether Prometheus will catch on, however, depends on whether its incentives to follow evidence-based guidelines will eliminate enough waste to fund quality-based bonuses for physicians.

Conceived by a health policy experts and healthcare, insurance, and employer leaders, Prometheus Payment received a $6 million, 3-year grant from the Robert Wood Johnson Foundation in 2007. The Healthcare Incentives Improvement Institute, Inc, a Newtown, Connecticut, think tank housed at Bridges to Excellence (a national, employer-sponsored pay for performance program), is working with the pilot organizations to develop a variety of approaches to the Prometheus concept.

Although Prometheus was launched before Congress passed HR 3200, its goals are congruent with the reimbursement changes contemplated in the Patient Protection and Affordable Care Act. According to Alice G. Gosfield, a healthcare attorney and policy expert who is a cofounder of Prometheus Payment, these new government pilots and policies -- including trials of payment bundling, accountable care organizations, and the patient-centered medical home -- dovetail with the premise of Prometheus.

However, it's not yet clear whether that premise will work with our fragmented care delivery system, where most providers have had limited experience in working together to coordinate care.

How Prometheus Works

Prometheus builds a case rate for a single episode of care, including all patient services related to that episode. These may be for inpatient procedures or for chronic conditions, but every episode spans a specified period. Evidence-based guidelines or expert opinions on the best way to handle a particular case determine which services are covered. Theoretically, any physician, whether employed or independent, can participate in providing care under such a case rate.

Each physician or other provider who joins a Prometheus team agrees to deliver the care for a portion of the guideline for that procedure or condition. The costs of providing these services, after adjusting for the severity of the patient's condition and other factors, add up to an "evidence-informed case rate" (ECR).

Physicians receive fee-for-service payments that are debited against the budget. The ECR also includes a withhold equal to 50% of the historical cost of "potentially avoidable complications" (PACs).

If the Prometheus team prevents those complications, it can share in the savings from averted ambulatory care, emergency room visits, and/or hospitalizations. The physicians who have the highest quality scores -- as measured by guideline adherence, outcomes, and patient satisfaction -- receive an additional bonus.

An individual physician's quality score determines 70% of his or her share of the PAC savings. The other 30% depends on the performance of the team, encouraging the physicians to collaborate and improve coordination of care.

Physicians have limited financial risk in the Prometheus setup. If the case rates are set high enough, they will receive close to what they would ordinarily get in fee for service. If they and their team reduce waste by following care guidelines and avoiding complications, they stand to receive a bonus. When a case turns catastrophic, the financial risk reverts to the health plan or self-insured employer, Gosfield says.

Physician Views of Prometheus

The organizations testing the Prometheus approach include HealthPartners in Minneapolis, Minnesota; Priority Health and Spectrum Health in Grand Rapids, Michigan; Independence Blue Cross and Crozer-Keystone Health System in Philadelphia, Pennsylvania; and the Employers' Coalition on Health in Rockford, Illinois. The New York State Health Foundation and the Colorado Health Foundation are funding additional pilots.

Health Partners, which includes a health plan and a physician group, was the first healthcare organization to test Prometheus. Its 2-year pilot, which also included the Park Nicollet Medical Group and hospitals affiliated with each group, focused on the ECR for acute myocardial infarction because there were clear community guidelines for cardiac procedures. Besides inpatient care, the case rate covered follow-up care for 30 to 90 days.

Unfortunately, the pilot did not save money for either HealthPartners or Park Nicollet, says Babette Apland, Senior Vice President of Health and Care Management for HealthPartners.

"The key finding for HealthPartners Medical Group and Park Nicollet was that the medical groups are following the evidence-based guidelines," says Apland. "They are preventing these avoidable complications, and so this model really didn't have an impact. The Prometheus model pays about the same as the fee-for-service system. Within the episode of care, whether it's the heart attack care or a knee or hip replacement, what we're seeing is that there isn't much opportunity for improvement within the episode."

In contrast, James F. Byrne, MD, Chief Medical Officer of Priority Health, has high hopes for the plan's pilot of chronic-disease ECRs in conjunction with the employed physician group of Spectrum Health, a large, integrated delivery system that owns Priority. "We see this as the future in terms of payment reform -- that per capita cost management is front and center," he says. "This represents a pretty significant shift in direction in terms of getting away from fee for service and getting a little more accountability by all parties for managing costs."

Spectrum and Priority have decided to try ECRs for 1 procedure (colon resection) and 4 chronic conditions: asthma, diabetes, congestive heart failure, and chronic obstructive pulmonary disease. Byrne views these as areas with big opportunities for cost reduction by preventing emergency room visits and hospitalizations. Employed primary-care doctors and cardiologists will be involved in the pilots, which will enroll members of Priority's commercial and Medicare plans.

It's interesting to note that Priority is considering adding some degree of financial risk to the basic Prometheus model. "You can put in a little bit of risk, more risk, or no risk, and it's a point that's negotiated between the health plan and the providers," says Byrne. He admits, however, that most area physicians are reluctant to take financial risk.

Pros and Cons of Prometheus

A RAND paper on various methods of reimbursement reform gives Prometheus high marks. "We estimate that...with broad use of the Prometheus model of bundled payment for six chronic conditions and four acute conditions or procedures requiring hospitalization, national health care spending could be reduced by 5.4% between 2010 and 2019," the researchers stated in an article in the New England Journal of Medicine in November 2009. However, that estimate assumes reductions of 25% to 50% in avoidable complications. Applying Prometheus only to inpatient procedures would hardly cut costs, the authors added.

ECRs for chronic conditions offer greater promise but also present challenges. For one thing, these case rates cover just 1 year. That may be enough time to see savings with a condition like heart failure, which has a high readmission rate, but not diabetes, which develops slowly with time, notes Lisa Bielamowicz, MD, Managing Director of the Advisory Board Company, a consulting firm in Washington, DC.

Bielamowicz also acknowledges that it's difficult to apply Prometheus to a patient with multiple comorbidities. Gosfield counters that more than 1 case rate can be applied to a particular patient simultaneously. Also, if a condition like hypertension, say, should suddenly morph into a heart attack, the first case rate could be "broken," Gosfield says, and an acute myocardial infarction ECR could replace it. However, as Apland observes, it's a very complicated scenario in chronic diseases.

The other question -- one that applies to other proposed payment reform models, as well -- is whether small, independent practices could participate in a Prometheus program. So far, 3 of the 4 pilots are being executed by large, integrated delivery systems (the fourth involves an employer coalition). Moreover, Health Partners and Spectrum are focusing exclusively on their employed physicians, although Crozer-Keystone will include some private orthopaedists in its pilot.

Walt Zywiak, a consultant with CSC Global Healthcare in Falls Church, Virginia, points out that it's much easier to enlist the support of employed doctors. Getting private practitioners to negotiate and divide up a case rate, he says, "is a challenge."

Gosfield says that if a doctor is interested in Prometheus, he or she could join a clinically integrated independent practice association or a physician-hospital organization that has the infrastructure required to implement the model. Although there are only a handful of such organizations in the country today, their numbers are growing, she says. However, in the near term, Prometheus pilots will be mostly confined to big healthcare systems.

If a doctor happens to work for a large system or a multispecialty group, Prometheus might offer a good way to prepare for future reimbursement changes, but it's unlikely to have an impact on private-practice doctors for the foreseeable future.