AMA asks House: Go slow on pay-for-performance

A longer phase-in would allow Medicare to test quality measures and risk-adjust physician performance results, the Association says.

By David Glendinning — Posted Oct. 17, 2005

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Washington -- The American Medical Association has asked the sponsor of a House pay-for-performance measure to give physicians more time to transition to the new payment system.

AMA Trustee John H. Armstrong, MD, made the request during a recent hearing before the House Ways & Means health subcommittee, chaired by Rep. Nancy Johnson (R, Conn.). She has authored a bill that would pay physicians starting in 2009 based on how well they meet predetermined quality measures. Giving doctors and Medicare officials an extra year to try out the reporting system at the heart of the proposal would help ensure that it operates in an equitable way, Dr. Armstrong said.

"We would strongly support a greater amount of time for transitioning to a value-based program for physicians' services," he said. "A ramp-up period in 2006, with a phase-in from 2007 through 2010, would allow for proper development of the program."

Johnson's bill, the Medicare Value-Based Purchasing for Physicians' Services Act of 2005, would require the Centers for Medicare & Medicaid Services to approve quality measures next year that would be used to gauge doctors' performances. Full reimbursement updates in 2007 and 2008 would be contingent on whether physicians reported quality data, and 2009 would mark the launch of actual performance-based payments.

Pushing off the effective date of the new payment system to 2010 would give regulators and participants more time to test its components and make sure that the measures are painting an accurate picture of physicians' quality of care, Dr. Armstrong said.

"Pilot testing, prior to full implementation, is essential," he said. "Medicare value-based purchasing for physicians' services is a completely new concept, and demonstration results with this type of system are currently not available."

Risk-adjustment of the quality results also would be fundamental, Dr. Armstrong said. This would prevent doctors from scoring low on quality simply because they were treating sicker patients. The AMA is urging Congress to hold off on making the data publicly available until such questions have been answered.

Johnson did not say whether she would support an extension of her original time frame for the reforms, but she agreed that the quality measures and any risk adjustments must be precise.

"By the time we get to paying for clinical performance, I think that we should have incentivized people to clean up the data and to address what's useful and what isn't," she said. "The bill does, of course, require that the data be accurate."

The AMA strongly supports the provisions in the bill, HR 3617, that would repeal the physician payment formula that is set to cause multiple consecutive years of Medicare cuts to doctors. But the Association is asking that its recommended changes to the pay-for-performance side of the measure be implemented before passage.

At press time, neither Johnson nor her aides were able to say when the panel might vote on the bill.

If it appears that Johnson will be unable to get her legislation to President Bush's desk in time to reverse the estimated 4.4% reduction in pay that starts Jan. 1, Congress once again could consider more short-term options. Health subcommittee ranking member Pete Stark (D, Calif.), for instance, has announced his opposition to scrapping the physician reimbursement formula but suggested at the hearing that lawmakers could approve a two-year temporary reversal of the cuts.

The jury is still out

When it comes to the concept of using pay-for-performance to improve the quality of care, some physicians aren't fully convinced.

Johnson's bill would reduce Medicare payments by 1% for physicians who do not meet certain quality thresholds or who do not improve over time. Physicians who do make the grade would receive a full pay update at the beginning of the following year based on the increase in the costs of providing medical services.

But this incentive would be insufficient to change some doctors' behavior when it comes to the care that they provide, said Robert Berenson, MD, a senior fellow at the Urban Institute. Although proponents of pay-for-performance say officials can use the system to encourage the reduction of unnecessary care as well as boost the provision of needed services, the financial reward from increasing utilization will far outstrip the payment benefits, he said.

"That is insignificant compared to the basic incentive to do more surgeries," Dr. Berenson said. "Pay-for-performance is one mechanism a good doctor might respond to, but the ones we're having problems with will not."

In addition, even the best physicians may not be able to reconcile the costs of getting their practices up to speed for reporting quality data with the higher reimbursement rates that they might be able to get for performing well, said Thomas Jevon, MD, a family physician in Wakefield, Mass. Dr. Jevon said he declined to apply for the "Bridges to Excellence" diabetes reporting project because the reward offered was not worth the price of participating.

But even if Congress does not approve Johnson's legislation before the end of the year, doctors soon could get the chance to start practicing their quality reporting anyway. CMS Administrator Mark McClellan, MD, PhD, told lawmakers at the hearing that the agency was looking into administrative ways to allow voluntary reporting by physicians as early as next year.

The program would involve at least 66 quality measures that CMS has developed in partnership with the AMA and other physician organizations, Dr. McClellan said. At least 29 medical specialties, representing about 80% of Medicare spending on physician services, would be eligible to participate without any effect on their Medicare reimbursements.

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