Legislation Assembly Democrats John Burzichelli, Craig Coughlin, Gary Schaer and Troy Singleton sponsored to allow hospitals to provide doctors with performance-based incentive payments to increase quality of care and reduce costs is now law.
“Essentially, this law will allow hospitals and physicians to enter into arrangements to improve the overall health of an individual patient by tracking him or her through the health care delivery system,” said Burzichelli (D-Cumberland/Gloucester/Salem). “Through objective measurements, physicians will have an additional incentive to go above and beyond to improve outcomes for their patients. This is a win for everyone.”
The new law (A-3404) enables New Jersey hospitals to apply the benefits of the previously successful Medicare gainsharing program, which was operational from 2009 through 2016, to the New Jersey commercial patient population by permitting physicians and hospitals to work together to improve patient care while cutting costs.
“This creates an additional incentive for physicians and hospitals to work collaboratively and efficiently to strive for excellence,” said Coughlin (D-Middlesex). “While doctors will receive incentives, it’s ultimately the patients who will win through superior levels of care.”
“Extraordinary increases in the cost of health care demand innovative approaches that simultaneously will result in lower costs and higher quality,” said Schaer (D-Bergen/Passaic), chair of the Assembly Budget Committee. “By boosting the performance of New Jersey’s health care professionals, our state can better promote wellness and ultimately decrease the health care burden on families’ budgets.”
“When doctors in New Jersey do better, everyone in New Jersey does better,” said Singleton (D-Burlington). “Incentivizing physician performance will mean more engaged providers, better outcomes and an overall better health care system.”
A hospital that seeks to implement such a plan would be required to establish a steering committee to: develop institutional and specialty-specific goals related to patient safety, quality of care, and operational performance; implement an incentive payment methodology that ensures fair and consistent payments that correlate with individual and collective physician performance; and adopt a mechanism to protect the financial health of the hospital. At least half of the members of the committee must be physicians.
The plan additionally may include specific patient management tasks, care redesign initiatives, and patient safety and quality of care objectives.
In developing the goals for a plan, steering committees will be required to ensure that there exist no incentives to reduce the quality or provision of medically-necessary care or to exceed best practice standards. In developing the payment methodology for a plan, steering committees will be required to ensure that physician performances are objectively measured in light of each physician’s own performance, the nature of the care provided, improvements in the physician’s performance over time, and local and regional standards.
Hospital and physician incentive plans will be administered by an independent third party. Except for plans limited to specific clinical specialties or diagnosis related groups, hospital and physician incentive plans will apply to all admissions and all inpatient costs related to those admissions in a given program. Plans will be open to surgeons and attending physicians of record who have been on the medical staff of the hospital for at least one year. Hospitals will have the discretion to additionally open their plans to other physicians involved in the provision of inpatient care. Patients are to be notified of a hospital and physician incentive plan in advance of admission.
Physicians will be permitted to withdraw from a plan upon reasonable notice to the hospital, and hospitals may terminate a plan upon reasonable notice to the Department of Health and to participating physicians.
DOH would also be required to review hospital and physician incentive plans every six years.
The measure, which received unanimous approval from both houses of the legislature, was signed into law on Monday.