Medicare Readies Pilot Test Of Pay-for-Performance Plan

The Medicare program will launch a three-year pilot pay-for-performance, or P4P, program next year to encourage physicians who treat chronically ill patients to adhere to specific quality-control guidelines.

The demonstration project will compensate physicians based on the quality of care they provide to Medicare beneficiaries with chronic conditions in 800 small- or medium-sized practices in Arkansas, California, Massachusetts, and Utah.

During the first year, physicians will be paid for reporting data on quality measures. In subsequent years, the program will offer physicians annual performance-based bonuses of $10,000 per clinician and up to $50,000 per medical practice.

The program will continue to pay physician groups on a fee-for-service basis, but participating physicians will submit annual data on up to 26“ quality measures” on the care of patients with diabetes, congestive heart failure, and coronary artery disease, as well as the provision of preventive health services, such as immunizations and cancer screenings, to high-risk patients with a range of chronic diseases. Mental illnesses are not among the conditions in the program, according to the Centers for Medicare and Medicaid Services (CMS), which administers Medicare.

The pilot, known as the Medicare Care Management Performance (MCMP) Demonstration, was authorized under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

“Through this demonstration and the rest of our set of value-based payment demonstrations, we are finding better approaches to doing that than ever before,” said then CMS Administrator Mark Mcclellan, M.D., Ph.D., about efforts to improve quality and cost-effectiveness in the program.“ This is another important step toward paying for what we really want: better care at a lower cost, not simply the amount of care provided.”

Other Pilot Projects Under Way

The pilot is among several other P4P pilot programs, such as the Premier Hospital Quality Incentives (PHQI) demonstration that involves acute care hospitals and the Physician Group Practice demonstration that involves 10 large multispecialty group practices nationally (Psychiatric News, March 18, 2005).

“We know that most patients receive care in smaller medical practices,” McClellan said, “which is why it's so important to have an approach that works for making the link between payment and quality of care in these settings.”

Arkansas, California, Massachusetts, and Utah also are the pilot states for the Doctor's Office Quality–Information Technology CMS project, which aims to promote the adoption of electronic health record systems and information technology in small to medium-sized physician practices to help enhance quality of care.

Physicians are eligible to participate if they are the main provider of primary care to at least 50 fee-for-service Medicare beneficiaries in a solo or small to medium-sized group practice. The pilot program will use quality measures similar to those of other CMS P4P demonstrations, which include, for example, the percentage of diabetic patients whose cholesterol is under control and who are getting appropriate foot and eye exams, the percentage of congestive heart failure and coronary artery disease patients receiving appropriate medication therapy, and the percentage of high-risk patients with chronic diseases getting appropriate immunizations and cancer screenings.

CMS officials said the program aims to improve both the quality and cost-effectiveness of the care provided.

“Based on the actuarial analysis underlying the demonstration program, improved performance on these clinical quality measures and the better quality of care that they reflect is expected to result in overall savings to the Medicare program owing to reduced admissions to hospitals and emergency rooms as well as delayed onset or avoidance of complications from these serious chronic conditions,” according to a CMS press release.

The PHQI pilot program has already produced improvements in quality of care under a P4P system, according to CMS.

Further Congressional Action Expected

The law authorizing the program also requires federal health officials to report to Congress within a year after it ends.

But Congress is unlikely to wait for further reports on the concept of paying hospitals and physicians for adhering to practice guidelines and meeting standards for quality improvement before addressing changes to the Medicare physician payment formula.

Several leading members of Congress have indicated that P4P measures should be included in any change to Medicare's physician reimbursement system. House and Energy Commerce Committee Chair Joe Barton (R-Texas) and House Ways and Means committee chair Nancy Johnson (R-conn.) have pushed separate legislation that would offer bonus payments to doctors who participate in quality-reporting programs.

Johnson's bill (HR 3617) would stop the 5.1 percent cut in Medicare physician reimbursements slated to begin January 1, 2007, and instead boost reimbursement by 1 percent, with an additional 1.5 percent boost if physicians agree to submit quality-of-care data.

The AMA and APA urged Congress to address the issue during its post-election lame-duck session and halt any reimbursement cut while quality-of-care measures are developed over the next year or two.

“The chairs of key congressional committees seem likely to tie part of a positive payment update to voluntary participation in quality reporting programs,” said Nicholas Meyers, director of APA's Department of Government Relations. “Congressional investment in quality reporting will play an important role in the next Congress, as well.”

The AMA is already developing performance measures, a process in which APA is participating (Psychiatric News, December 2, 2005).

“APA has been working with the AMA and other medical specialties to advocate for a quality-reporting approach that is clinically meaningful, and practical and linked to payment incentives, as opposed to sanctions,” Meyers said.

Similar efforts are under development by accrediting agencies such as the Joint Commission on Accreditation of Healthcare Organizations and the National Commission on Quality Assurance.

Further information on the Medicare Care Management Performance Demonstration is posted at<www.cms.hhs.gov/DemoProjectsEvalRpts/MD/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=3&sortOrder=ascending&itemID=CMS057286>. The text of HR 3617 is posted at<www.thomas.gov/cgi-bin/bdquery/z?d109:h.r.03617:>.▪