Medicare eases quality reporting, warns of annual pay battles

Washington -- The current struggle on Capitol Hill to prevent Medicare pay cuts likely will become an annual event for physicians unless doctors can prove they will be active players in a future pay-for-performance system, according to the program's chief.

Centers for Medicare & Medicaid Services Administrator Mark McClellan, MD, PhD, said in a recent interview that lawmakers are waiting for signs from the physician community that it is serious about improving health care by reporting how well it meets quality guidelines. In an attempt to encourage doctors to make such a good-faith showing, the agency has altered its Physician Voluntary Reporting Program to make it easier for them to participate.

Such quality reporting is the first step to a system in which Medicare or other payers reimburse based on predetermined performance standards.

"There's a strong congressional interest in not doing more than a one-year payment adjustment without seeing more visible progress in quality reporting and quality improvement programs," Dr. McClellan said. "It's more urgent than ever for us to work with the physician community to make real progress to get to a system that Congress would feel comfortable legislating on for the longer term."

A move from lawmakers to condition payment reform on performance would put a crimp in the plans of the AMA and other physician groups that for years have been pushing for a permanent overhaul of the reimbursement system. If left unchecked, the payment formula would reduce doctor pay by several percentage points each year for most of the next decade.

Dr. McClellan declined to say which lawmakers told him about Congress' desire to see more physician movement on quality reporting before committing to major reimbursement system reform. But both chambers approved language late last year that rejected the AMA's proposals both for a long-term solution and an interim two-year positive update. The one-year rate freeze upon which lawmakers decided awaits final House action before it can head to the White House for approval.

The CMS chief said one of the best ways for physicians to prove to lawmakers that they are earnest about quality improvement is to participate in the agency's nascent Physician Voluntary Reporting Program.

After CMS unveiled the initiative in late October 2005, doctors condemned the proposal for being overly burdensome and misdirected in its intent to improve physician care. The AMA and other groups called for the agency to throw it out and start anew.

Now CMS officials are saying that they have begun making big changes to the program based on physician feedback. The first significant alteration reduces the original set of 36 quality measures to a starter set of 16.

The move was welcomed by such groups as the AMA and the American College of Physicians, which had called for establishing a starter set. "The original PVRP represented an additional burden on physicians already doing more with less. The AMA shared its concerns with CMS Administrator Mark McClellan, and CMS listened," said Nancy Nielsen, MD, PhD, speaker of the AMA House of Delegates. "The revised program is a step in the right direction, and we will continue to collaborate with CMS on further ways to improve quality."

The groups also said more work was needed before the program would be ready to benefit physicians and beneficiaries. Doctors want the agency to replace the G-codes used to report the quality measures with more familiar CPT II codes. They also have asked CMS to dump several more measures, such as how many heart attack patients receive aspirin upon arrival, which correspond more accurately to a hospital setting.

"The good news is the starter set of measurements has been pared down to 16 from 36, but concerns remain about the administrative burden of G-codes," Dr. Nielsen said.

Federal officials will continue to improve the starter set as well as look for ways to entice more physicians to try it, Dr. McClellan said. CMS is willing to work with the AMA on developing new CPT II codes as an alternative reporting method, for instance, and is exploring giving an extra administrative payment to doctors to cover the cost of collecting quality data.

A Catch-22 for physicians

Last year Congress rejected the Bush administration's proposal to provide two years of Medicare rate increases to physicians with full updates going only to doctors who participated in the voluntary program.

But doctor groups say that won't be the end of the story. "While the CMS program is voluntary, our members need to know that the program likely will become the prototype for a pay-for-performance program with financial incentives attached as early as later this year," said C. Anderson Hedberg, MD, ACP's president.

If so, physicians could face a serious dilemma when it comes to getting the Medicare reimbursement system fixed. Doctors have said they will not embrace pay-for-performance without long-term payment reform, and Congress is saying it will not consider such changes without assurances that doctors will play ball on quality reporting.

Dr. McClellan said he recognizes the frustrations that physicians might feel when faced with such a Catch-22.

"I can understand perfectly why physicians wouldn't want to agree to any kind of long-term commitment on quality reporting or performance-based payments until there's also a long-term solution to the stability and predictability of the physician payment system," he said. "But ... we simply don't have enough well-developed evidence on how these reporting systems could actually work in practice to lead not only to more predictable payments but also to fewer complications and lower overall costs of care. The solution is that we need to work on both issues together."

Even if both processes start to move in concert, however, Congress still would need to find the billions of dollars to connect physician reimbursement updates to the increased costs of providing care. This economic barrier has played a large role in preventing lawmakers from implementing a long-term solution.