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
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
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
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.
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
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,"
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.