Medicare Compliance & Reimbursement

What regulators think of pay-for-performance.

When it comes to changing Medicare's payment structure, the reform bill may have been just the tip of the iceberg. At least, that's what Senator Max Baucus (D-MT) hopes.

New June 23rd legislation introduced by the ranking finance committee member adds onto the National Voluntary Hospital Reporting Initiative -- which links better reimbursement with quality reporting -- by introducing a new payment incentive structure in the Medicare Advantage and End Stage Renal Disease programs.

The "Medicare Quality Improvement Act of 2004" would award bonus payments to plans and providers, starting with MA and ESRD, that deliver the highest quality of care and that show consistent improvement. The bill would expand the quality measures collected for fee-for-service providers, and ultimately establish pay-for-quality programs across all of Medicare.

Why all the fuss over quality of care?

Baucus points to studies that patients in the U.S. receive appropriate medical care from doctors and hospitals only about half of the time "The United States spends twice as much on health care than any other country, but studies have shown that the quality is about the same," says Baucus. Medical errors mean more trips to the hospital, more drugs and more surgeries -- a single medication error averages $4,700, he adds. Want to stimulate the economy? Poor quality of care, which costs U.S. health system on over $1 billion in avoidable hospital bills, could be a "compelling place to start."

Lesson Learned: Big changes in pay structure and quality reporting could be in the planning stages for Medicare Advantage and End Stage Renal Disease programs.