Medicare Agency Says Pay for Performance Could Yield Savings
Physician groups' participation in a federal pay-for-performance program translated to quality-of-care improvements that reduce costs for Medicare, CMS officials said on Wednesday, the New York Times reports.
The study, which began in April 2005 and will run through April 2008, is an attempt by CMS to re-examine how Medicare reimburses physicians for care with a focus on quality, rather than the number of tests and procedures performed.
For the experiment, CMS analyzed hospital and physicians' bills for 224,000 patients being treated by 10 selected physician groups and compared them with bills from other doctors and patients in the same geographic areas. Doctors involved in the experiment were required to meet certain quality criteria, such as adhering to 10 clinical measures for diabetes care. For the second year, clinical measures for heart disease care will be added; in the third year, measures for hypertension and basic preventive care for all patients will be assessed.
Results of the experiment showed that all 10 physician groups participating in the program improved patient care during the first year. However, only two groups -- the University of Michigan Faculty Practice and the Marshfield Clinic in Wisconsin -- met the threshold to qualify for bonus payments. The two groups were paid a total of $7.3 million, in addition to standard Medicare payments for services, for saving the program $9.5 million.
CMS has not yet calculated the overall savings of the experiment, but physician groups say that the experiment likely saved Medicare a combined $21 million. Herb Kuhn, acting deputy administrator for CMS, said, "We want to reward providers for the right care at the right time." He added that he was "very, very pleased with the first-year results."
The Times notes that all 10 of the physician groups are part of "large, sophisticated organizations" that have "substantial experience in electronic health records or other systems known to improve patient care."
The "fact that eight of them did not meet the bonus threshold indicates how difficult it may be for Medicare to develop a payment system giving most doctors, many in small, less-modern practices, a true financial incentive to improve care," according to the Times.
Caroline Blaum, the physician who led the pay-for-performance effort at the University of Michigan, said the experiment has "filled a huge gap in care" but added that the "financial model for this program may not be viable." She added that doctors at the hospital were unsure about exactly what they had done to reduce costs.
However, many physician groups said changes in how they care for patients, such as following up emergency department discharges with a nurse's call or providing more patient education, were useful even if they did not increase revenue. Questions also "remain about how to motivate individual physicians because the experiment rewards organizations, not the individual doctors who must actually ensure that the patient gets a flu shot or goes to the right specialist," the Times reports.
Karl Ulrich, president and CEO of the Marshfield Clinic, said, "The real driving force of change needs to occur in a physician office" (Abelson, New York Times, 7/12).