Monday, July 11, 2005

Medicare & Pay for Performance

I was at a meeting on Friday, picking up a few CME hours, and was able to hear a presentation by a CMS regional chief medical officer on the Medicare "pay for performance" proposal. The program is now to be called "Value-Based Purchasing," perhaps in response to some of the criticism of the previous nomenclature. Basically, the whole idea is to decrease costs (no surprise there), and rewards for performance are to be budget-neutral ---- in other words, if hospitals and physicians are to be paid more based upon meeting certain performance goals, the money will come out of somebody else's revenue (either hospitals or less-well-performing physicians). It is clear that CMS does not feel it is getting an appropriate "bang" for its bucks:

"Our medical system has progressed tremendously over the past 20 years. People are living longer and better. But there are still lots of examples of where we are paying more than we need to for complications, medical errors and duplicative procedures." (CMS chief Mark McClellan, M.D.)
"Today, Medicare pays the same amount regardless of quality of care. Some people would argue that in fact, the current Medicare payment system rewards poor quality. This situation just doesn't make sense to me, nor should it to beneficiaries." (Sen. Charles Grassley, introducing the Medicare Value Purchasing Act of 2005)
So, what is on the table for physicians and hospitals under the P for P system?

The Secretary would be given the authority to select measures of quality to be used for each program for the different providers. The selected measurements, in consultation with provider input, would be based on a range of criteria established in the legislation and could be varied according to the size and scope of hospitals and to physician specialty and practice size. Such measures would be weighted for clinical effectiveness and risk-adjusted.

While the program would be voluntary, providers not participating in the program would receive a reduction to their updates. Specifically, in FY 2007 and thereafter, hospitals not participating in the program would see their payment updates be reduced by 2 percentage points. Those hospitals participating in the program would receive a full update, as well as be eligible to receive payments from a quality pool financed through a reduction in Medicare inpatient payments of the reporting hospitals. The quality payments would then be redistributed to those hospitals based on certain thresholds of quality performance or quality improvement, as determined by the Secretary.

For physicians, beginning in 2006, a comparative utilization system to measure resource use would be established based on claims data and shared confidentially with physicians in 2006 and 2007. Beginning in FY 2007, physicians not reporting on quality measures as determined by the Secretary would receive an update reduced by 2 percentage points. Physicians reporting quality data would receive a full update to the Medicare payment according to current law. Beginning in 2008, physicians would be eligible to receive payments from a quality pool financed through reductions from the conversion factor of physicians reporting the quality measures. The quality payments would then be redistributed to those physicians based on certain thresholds of quality performance or quality improvement as determined by the Secretary and efficiency of care provided according to the comparative utilization system. In addition, the Secretary shall establish procedures for making the data submitted by physicians available to the public. (AAMC Washington Highlights, July 8, 2005)

In essence, this means several things:
  1. Those that participate will potentially see a 2% increase in reimbursement, based upon a pool of money that is shared.
  2. Those that don't participate will definitely be paid 2% less than standard Medicare rates.
  3. Participation is not described above, but requires that physicians and hospitals have electronic medical record systems. CMS recognizes that there are no standards in this arena, and states it will be working to establish those standards.
  4. In order for the system to work, gainsharing between physicians and hospitals must be allowed to take place; that will require legislative changes.
  5. All of the data generated will be readily accessible to the public.
Unfortunately, while the Grassley-Baucus legislation provides a framework for this proposed "transformational change" of Medicare, there are a number of devilish details that need to be ironed out. I suspect that one of the most difficult issues that physicians in particular will have to deal with is the EMR requirement --- they are not cheap, and will have to interface fully with the system that is chosen by the hospital where one practices. Many physicians practice at more than one facility, all of whom therefore must have fully interfacing/integrating EMR systems. CMS apparently recognizes the costs involved, and is discussing the potential for loans or subsidies to get this part of the project underway.

I worry about the solo or small group of internists who have yet to give away their patients to hospitalists; facing a significant cost to participate with this program, with the prospect of very little increase in reimbursement, will they simply opt out of Medicare? A 2% increase in revenue may mean a significant amount of money to a large hospital system, but may be far too little to ensure the full participation of many small groups of physicians.

Perhaps the most vexing problem facing CMS is how, and exactly what, to measure in terms of quality? There are any number of programs currently being utilized across the country to measure outcomes, and they work well within certain parameters with measurable data. Picking what data to collect, and what to toss, will be a challenge for CMS. This will be an interesting process to watch.