Medicare Compliance & Reimbursement

... but don't expect a Congressional rush to judgement on issue.

Whether or not Congress follows, the Medicare Payment Advisory Commission has set its own clear course for the future of provider payments: Medicare should pursue a pay-for-performance strategy, offering more money to providers who improve the quality and efficiency of their care, and less to those who don't.

That's what MedPAC Executive Director Mark Miller told health reporters at a March 1 briefing on the Commission's annual March recommendations to Congress. A year ago, commissioners talked about focusing Medicare on quality of care, said Miller.

"Now, that theme has developed further, into differentiating among providers," he said.

MedPAC is recommending that the process start gradually, and both Congress and the Centers for Medicare and Medicaid Services are interested, as they seek ways to ensure that Medicare buys value for the dollar without breaking the bank for taxpayers and enrollees.

Congress Won't Rush Decision

Facing more overt political pressure from providers, Congress' response is likely to be considerably more gradual than the panel would prefer. But while CMS is still exploring what it can do without new statutory authority, the agency is committed to P4P and will at least launch research and demonstration projects in areas where it can't shift the payment mechanism on its own.

Last year, MedPAC recommended that Medicare put in place P4P for private health plans and dialysis providers, Miller noted. This year, similar recommendations are made for hospitals, home health agencies, and physicians.
 
Central to deeming P4P workable for a given group is a panel determination that solid quality-measurement tools exist in the sector, said Miller. Adequate P4P measures must be well accepted, amenable to accurate risk adjustment, and not unduly burdensome for providers, he said.

Docs To Do IT 2-Step

On those grounds, Miller says P4P for physicians is "a little bit more a two-step process" than in the other sectors, for which MedPAC recommends moving straight to measuring compliance with processes known to improve care outcomes.

For docs, IT would be the first P4P target. The Commission recommends that physician payments be put at risk for implementing certain health IT functionalities, said Miller. For example, physicians could be judged on whether they established patient registries with the "ability to identify all the patients you gave Vioxx to."

"Then, in a couple of years, you'd move toward a process-oriented payment system," Miller explained. Suitable process measures for physicians are available, and more are in development, but MedPAC isn't recommending they be used today because no current process-measure set is suitable for all physician specialties.

Miller stressed that MedPAC plans to make its P4P recommendation for physicians in the context of the panel's ability to recommend an overall payment level doctors should receive.

In other words, MedPAC wouldn't recommend that physicians be put at risk in a P4P scheme for 2006 in the event that Congress did not amend the formula-driven negative payment update that physicians are scheduled for under current law.

Instead, the panel recommends a switch to annual updates based on payment adequacy, much like the update recommendation mechanism that's used for other providers, such as hospitals. For next year, MedPAC says that adequate physician payment would equal the projected change in input prices minus 0.8 percent. Based on current estimates, that would amount to about a 2.7-percent payment hike.