Pay-for-performance should be pay-for-quality-care

A message to all physicians from the chair of the AMA Board of Trustees, Duane M. Cady, MD.

By Duane M. Cady, MDis a general surgeon who was in private practice for 35 years in Syracuse, N.Y. He served as chair of the AMA Board of Trustees during 2005-06. Posted Aug. 1, 2005.

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Often overlooked in discussions of pay-for-performance plans and Medicare's sustainable growth rate is a single common-sense question: What's in it for my patients?

The AMA House of Delegates adopted the principles and guidelines developed earlier by a specially approved AMA Board/Council Task Force on Pay-for-Performance. Their emphasis was on creating incentives for physicians to improve and maintain quality patient care -- and not at the cost of harming the patient-physician relationship.


There is no debating the rightness of the position. What needs to be underscored is the logic, the commitment of America's doctors to the well-being of their patients.

Since its founding in 1847, the AMA has championed both quality of care and the patient-physician relationship. At no time have physicians compromised quality and patient benefit.

All the discussion and debate over the sustainable growth rate takes place in front of that same background of ideas. The 40-year history of Medicare demonstrates a commitment by our nation to ensuring that seniors won't be forced to choose between paying for food and paying for medical care. The recently adopted prescription drug benefit is the most recent evidence of that philosophy.

The costs of care, on the other hand, have brought Medicare to the point of crisis. The 2005 Medicare Trustees Report projects physician payment cuts of 26% over six years beginning Jan. 1, 2006, because of the flawed SGR formula that dictates physician payments. What's more, the Board of Trustees report notes continued increases in physician costs of running a practice and caring for patients. Since 2002, physicians have received less than half the amount the government says it costs to provide care.

The only option any business faces when costs increase and revenues decline is to reform, reorganize, retrench and focus on the profitable parts of the business while eliminating the money-losing parts.

Physicians are no different. A recent AMA survey found 38% of physicians saying the first wave of cuts next year would force them to decrease the number of new Medicare patients they accept. This heartbreaking decision hurts our profession but, more important, it hurts our patients. That is why we are working so diligently to counter the cuts with meaningful reform.

The campaign to move Congress is in full swing with National House Calls in six states this month alone, and the grassroots activists pushing all summer long are supported by radio and print advertisements. An all-physician mailing is coming up as well.

If you haven't already done so, let me urge you to contact your U.S. representatives and senators in support of SGR reform to replace the forecasted cuts with positive updates.

We have 75 co-sponsors in the House for remedial legislation -- Preserving Patient Access to Physicians (HB 2356) -- to replace planned cuts with a modest increase for 2006. It also would replace the broken formula with one based on real-world costs of practice.

A bill in the Senate (S 1081) would replace projected cuts for the next two years with an update based on the government's measure of inflation in practice costs. That measure has 14 co-sponsors.

Working together, we can advance both bills. Already, much of the credit for success in gaining co-sponsors in the House can be attributed to the terrific cooperation of approximately 40 state medical associations and national medical specialty societies.

No one has convinced me that reducing physician payments increases quality or improves patient safety. My own experience, and that of countless of our colleagues, is that payment cuts create physician shortages that, in turn, harm patients.

The number of seniors has increased 6.8% during the last decade, from 33.9 million to 36.2 million. By 2020, that number will reach 54 million, a 49% jump. Meanwhile, some projections suggest that there could be a shortage of 200,000 physicians by 2020, with or without Medicare physician payment cuts.

Now is certainly not the time to discourage physicians from treating seniors. Just the opposite is true. Now is the time to vastly expand the recruiting and training of physicians for the burgeoning Medicare market.

Largely the same argument applies to my concern for pay-for-performance plans.

The first examples I've seen convince me of the need for our voices to be heard to make certain the principles and guidelines we've developed are included in any and all plans in the future.

Reasonable, thoughtful and evidence-based, the AMA viewpoint uses a scientific approach to easing the cost-of-benefits dilemma facing our system. PFP programs need to emphasize quality of care, to enhance, not diminish, patient-physician relationships, to promote broad-based physician participation from all specialty and practice modes, to use accurate data and fair reporting practices, and to provide fair and equitable program incentives.

In short, we advocate fair and ethical programs that center on the patient, link evidence-based performance measures to financial incentives and are aligned with the principles and guidelines hammered out after diligent analysis by established authorities.

Duane M. Cady, MD is a general surgeon who was in private practice for 35 years in Syracuse, N.Y. He served as chair of the AMA Board of Trustees during 2005-06.

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