Medicare Compliance & Reimbursement

New bill would facilitate the spread of quality incentives.

A new bill could have a huge impact on the quality of health care provided under Medicare.

Sens. Chuck Grassley (R-IA) and Max Baucus (D-MT) introduced June 30 the Medicare Value Purchasing Act, which would institute quality incentives for a variety of providers under the Medicare program.

Physicians, hospitals, health plans, skilled nursing facilities, home health agencies and end-stage renal disease facilities would be eligible for financial rewards. MVP would establish incentives and quality measures based on recommendations from the Institute of Medicine and the Medicare Payment Advisory Commission, the latter of which has been recommending just such a program for Medicare in its most recent meetings.

MVP would provide incentives first to providers who report their quality data to Medicare, then would provide additional incentives to providers who can demonstrate quality performance or improvement.

Although the introduction of the bill is hailed as a huge step for value-based purchasing advocates, the incentives program would only affect a tiny portion of providers' pay.  The portion of total reimbursement tied to quality of care will be only 1 percent in the first year, increasing to 2 percent over a 5-year period.

Providers Cautiously Express Concerns

Although many organizations immediately praised the bill, several voiced qualms.
 
Of initial concern to many providers is the fact that the MVP bill would not provide additional funds as incentives. Instead, existing Medicare monies would be shifted, the result being that high-quality providers will start seeing increased Medicare revenues at the expense of poor-performing providers, who would take a financial hit.

"One aspect of their proposal - funding pay-for-performance for hospitals through an across-the-board reduction to the standardized payment amount - is a provision with which we have concerns," said Chip Kahn, president of the Federation of American Hospitals.
 
The program needs to be "fair and non-disruptive" for all and should also "identify an alternative funding source," Kahn added.