Experts Advise MedPAC on Incentives Under Medicare Pay for Performance
If Medicare adopts a pay-for-performance reimbursement system, officials should not lower payments to providers that do not meet the quality standards, a group of quality measurement specialists advised the Medicare Payment Advisory Commission on Friday, CQ HealthBeat reports. MedPAC and several members of Congress have recommended that CMS alter the Medicare reimbursement system to provide financial incentives for providers to improve care. MedPAC's plan calls for high performers to receive 1% to 2% higher reimbursements that would be offset by lower payments to below-average performers.
Samuel Nussbaum, chief medical officer for WellPoint, said at a forum sponsored by MedPAC that payment reductions to doctors performing below average would decrease the likelihood that they would invest in information technology. He also said that increasing payments to physicians performing above average by 1% to 2% is not enough of an incentive for them to improve care. Nussbaum recommended increased payments of 10% for primary care physicians, 5% for specialists and 2% for hospitals, based on relative income.
Jack Ebeler, CEO of Alliance of Community Health Plans, said that instead of maintaining a constant payment fund, CMS should add "new money" to the system.
Margaret O'Kane, president of the National Committee for Quality Assurance, also said new money should be added to the payment fund and urged adoption of NCQA's quality measures as the basis for a pay-for-performance system for Medicare Advantage plans (CQ HealthBeat , 9/9).
In related news, a new study required by the 2003 Medicare law found that flaws in the Medicare "case-mix adjustor" system allow some home health care providers to treat sicker patients to increase profits, analysts said at a MedPAC meeting on Thursday. The case-mix system alters payments to home health providers based on how sick patients are, with the intention of boosting payments to providers who are required to provide more services to sicker patients. The study found a "weak relationship" in which some providers with high case mixes -- meaning they have higher costs and thus higher payments -- also had higher profits than providers with low case mixes, CQ HealthBeat reports.
The study speculated that some home health agencies might seek out higher-cost cases for the increased reimbursements but then undertreat the patients to increase profit margins. MedPAC commissioners said the study should have focused more on "how precisely case mix varied with an agency's actual costs" to help determine whether the payment system should change, CQ HealthBeat reports (CQ HealthBeat , 9/9).
CMS Administrator Mark McClellan announced on Friday that the agency is soliciting proposals from groups that have ideas for enacting a major change in the health care system "at the area or regional level," CQ HealthBeat reports. The program, called for under the 2003 Medicare law, seeks to "use innovative payments to improve health and reduce costs for everyone in an area, not just for Medicare beneficiaries, but for all Americans." CMS is seeking proposals that combine financial incentives for complying with "evidence-based" clinical practice guidelines, use of IT to improve treatment and improved decision-making with patients.
Groups that wish to participate in the pilot program will not receive increased Medicare payments to implement their ideas because savings they generate should offset start-up costs, the solicitation for proposals says. CMS also stipulated that "projects must be replicable and exportable to other locations or organizations and must have the ultimate potential to transform the health care delivery system in this country." CMS set a Jan. 30, 2006, deadline for proposal submission but said it will give organizations until Sept. 29, 2006, to develop their proposals (CQ HealthBeat , 9/9).
Several articles recently examined issues related to the upcoming launch of the new Medicare prescription drug benefit on Jan. 1, 2006. Summaries of the articles appear below.
Media General/Winston-Salem Journal: The Media General/Journal on Monday examined the expected costs for beneficiaries of the new drug benefit as CMS prepares to announce which companies will offer prescription drug plans. According to a study by the Kaiser Family Foundation, the average person will pay 28% less out of pocket for prescription drugs under the new Medicare benefit, but the figure does not include the estimated average monthly premium of $32. Some experts also have expressed concern about the estimated seven million beneficiaries who will have to pay the full cost of medications in the so-called "donut hole" in the benefit between $2,250 and $5,100 (Mussenden, Media General/Winston-Salem Journal, 9/12).
- Pittsburgh Post-Gazette: The Post-Gazette in a two-part series on Sunday and Monday examined how the launch of the drug benefit will affect beneficiaries and insurers. In the first part on Sunday, the Post-Gazette examined the "avalanche of information" beneficiaries are facing as they enroll in the new benefit. Some experts have expressed concern that the large number of drug plans that will be offered in some regions will cause confusion among beneficiaries (Fahy, Pittsburgh Post-Gazette, 9/11). In the second part of the series, the Post-Gazette examined how health insurers, pharmacies and pharmacy benefit managers are "are positioning themselves to profit" from the new benefit. The article examines how the benefit providers are preparing for the launch and which types of PDPs -- including Medicare Advantage plans, PPOs and stand-alone plans -- will be offered under the new program (Snowbeck, Pittsburgh Post-Gazette, 9/12).