Medicare mulls incentive program

March 1, 2005

As the Medicare Payment Advisory Commission (MedPAC) continues to look at aligning Medicare payments to physicians with quality, efficiency, and outcome measures, it is expected that Congress will receive a final proposal on the plan this month.

As the Medicare Payment Advisory Commission (MedPAC) continues to look at aligning Medicare payments to physicians with quality, efficiency, and outcome measures, it is expected that Congress will receive a final proposal on the plan this month.

What is not certain is how much such a pay-for-performance (P4P) model will affect physicians who are unable or unwilling to participate in the program.

"There have been demonstrations of how this can be done and measured in the chronic disease areas, but it is more difficult with surgical procedures," said Nancey McCann, director of government relations, American Society of Cataract and Refractive Surgery.

The new payment policy would call for up to 2% of all Medicare physician payments to be set aside in order to make higher payments to physicians with better performance or who participate in quality programs.

Thus, the payment policy would have a huge impact by punishing physicians who cannot or choose not to meet established benchmarks. Reasons that physicians may elect not to participate include the fact that the planned incentive might be lacking in terms of enough financial impact for them to participate.

For instance, the cost of implementing an information technology infrastructure is more prohibitive for single-physician practices or even those that have five or fewer physicians. The result is they are unable to meet the benchmarks needed for higher recompense.

"The jury is out on just how successful such a program can be," McCann said.

The American Academy of Ophthalmology (AAO) has vowed to work to make sure that ophthalmologists can compete for the incentives regardless of their situations.

The Centers for Medicare & Medicaid Services (CMS) is testing the so-called P4P initiatives in several demonstration programs throughout 2005. The quality measures used mostly related to primary care physicians and are budget neutral. P4P measures include provider adoption of health information technology measures.

William Rich, MD, former AAO secretary for federal affairs and chairman of the RVS Update Committee, said AAO will need to submit evidence-based performance measures and concurrently develop Category II codes that can identify when the service has been performed. Dr. Rich said the AAO has been a leader in quality-of-care issues and began looking at performance measures in the early 1980s, which resulted in publication of the Preferred Practice Patterns (PPPs). More recently, the AAO has developed a software program for cataract surgical outcomes.

"But there was no reward for doctors who looked at outcomes or assiduously followed our PPPs," Dr. Rich said. "Many thought the academy was way ahead of the curve. Well, the rest of medicine and the payers have caught up, and the loudest buzz in Washington is manipulation of physician payment schedules to reward quality."

In the past, physicians have had to deal with types of P4P in the private insurance sector, so all of this is not new. However, those were limited to primary-care physicians and chronic diseases.

Catherine Cohen, AAO vice president for governmental affairs, said finding a way for ophthalmologists to be included in the incentives is a challenge.

"One of the biggest questions is how a surgical specialty can qualify for some of these increased payments," she said. "We have to make sure there is a way for ophthalmologists to qualify. Although this is not something that is going to happen immediately, we are taking it very seriously. We need to come to a consensus as to what would be a good measure."

Even with proper measures in place there could be some costs involved, particularly in the areas of technology implementation, that will cause physicians to wonder why they should bother taking part.

Is there a consensus benchmark where-by the incentive is worth the cost?

"It is commonly held that a 5% payment differential is needed to encourage doctors to participate in P4P programs in order to offset the higher staff and administrative costs of participation," Dr. Rich said.