Details emerge on new pay-for-performance test plan

Washington -- To date, Medicare's ventures into the world of pay-for-performance have been focused on hospital systems and larger physician practices. Next year, though, some smaller operations will get an opportunity to experience this world, too.

The Centers for Medicare & Medicaid Services has announced details of its Medicare Care Management Performance Demonstration, a three-year pilot project starting in 2007 that will create incentives for small- and medium-sized practices to coordinate better the care they provide to Medicare beneficiaries with chronic conditions. Congress mandated the demonstration in 2003 as part of its Medicare modernization legislation, along with a large-practice program that has been in operation for about 18 months.

The new project aims to determine whether offering financial bonuses to physicians for meeting quality goals through care coordination will improve patient care. Although practices will receive an extra payment for the first year merely by participating, more reimbursements for years two and three will depend on the degree to which the practices follow 26 separate CMS-approved clinical guidelines for chronic illness. CMS hopes to recruit roughly 2,800 physicians in about 800 practices in Arkansas, California, Massachusetts and Utah.

Offering up to $10,000 per year and up to $50,000 per practice for hitting the targets, the agency is confident that it can support a move toward higher quality and efficiency at the sites of care that seniors access the most, said outgoing CMS Administrator Mark McClellan, MD, PhD.

"This is another important step toward paying for what we really want: better care at a lower cost, not simply the amount of care provided," he said. "We know that most patients receive care in smaller medical practices, which is why it's so important to have an approach that works for making the link between payment and quality of care in these settings."

Quality over efficiency

The American Medical Association did not weigh in on the demonstration. But the new care management pilot does not incorporate the one aspect of the ongoing CMS large-practice project that garnered the most AMA criticism. Rewards in the 2007 pilot are based solely on whether physicians follow recommended quality guidelines through chronic care coordination, not on how much the care ends up costing in the long run.

The Physician Group Practice Demonstration that started in 2005, by comparison, offers 10 major physician practices the chance to share a portion of the money it saves Medicare by both improving the quality and lowering the costs of care. Association leaders and other physicians expressed concerns at the start that the majority of the potential reward was based on how many fewer federal dollars flowed to patient care as a result of the practices' efforts, not on how well the practices hit quality targets.

One reason that CMS likely omitted an efficiency target from the new demonstration is that the agency would find it difficult -- if not impossible -- to determine whether individual small-practice physicians' efforts were directly resulting in saved Medicare funds, said Barbara Walters, DO, senior medical director at Dartmouth-Hitchcock Clinic in Bedford, N.H. The clinic is one of the 10 participants in the group practice demonstration.

Unlike a large practice with hundreds of physicians, a full complement of specialists and an associated hospital system, a solo or small-practice setting lacks the infrastructure to report whether Medicare expenditures for a single patient have gone down over time, Dr. Walters said. While an entity such as Dartmouth-Hitchcock has a large enough scale to determine whether improved primary care results in lower Medicare costs due to reduced hospital admissions and fewer trips to the emergency department, an individual two- or three-physician practice could not make that assessment.

"The law of small numbers would do you in," she said.

Process measures and health IT

Medicare officials consulted with the 10 large practices when formulating the new project, and Dr. Walters said she and other participants urged CMS to make the performance bonuses an achievable goal for smaller practices. The upcoming demonstration will reward physicians if they adhere to chronic disease process guidelines such as screening at-risk patients for colorectal cancer, giving foot exams to patients with diabetes and prescribing beta-blockers for victims of heart failure -- all attainable steps for even the smallest practices, she said.

"A small practice that has enough of a core group of chronic patients, even without huge amounts of infrastructure, could participate," she said. "You can do a diabetic registry on a piece of paper as well as you can with an electronic medical record."

For practices in a position to adopt health information technology, the demonstration project will offer additional reimbursements for implementing an EMR and using it to report data electronically. As a further incentive for health IT, CMS will choose demonstration participants only from physician practices that work with state Medicare quality improvement organizations through the Doctor's Office Quality-Information Technology program, or DOQ-IT. The federally funded program promotes the spread of technology in the health care setting and assists Medicare participants that decide to adopt it.

Small- and medium-sized practices enrolled in DOQ-IT in the four demonstration states that apply for the pay-for-performance program and receive approval from CMS already may be familiar with some of its 26 quality measures. They are similar to ones being used in Medicare's Physician Voluntary Reporting Program, which CMS launched a year ago.

The AMA has convened a group of physician organizations to produce its own quality measures for doctors to report to the government. The Physician Consortium for Performance Improvement, which committed to lawmakers to develop roughly 140 performance measures by the end of 2006, has developed 130 and is on track to raise that to 170 by the end of the year, the Association said.