Bush eyes EMRs, P4P to slow Medicare spending

Washington -- President Bush's legislation to slow Medicare spending is heavy on provisions related to doctors -- from public quality rankings of physicians in five years to instituting pay-for-performance. But the bill doesn't address Medicare physician pay cuts due to take effect July 1.

James King, MD, president of the American Academy of Family Physicians, said Medicare pay reform needs to be a higher priority for the administration. "They have to come to terms with how they're going to pay physicians, where the money is going to come from and [how to] pay toward what they want to accomplish." The American Medical Association is working to prevent the 10.6% pay cut scheduled to kick in for the last six months of 2008.

Bush was required by the Medicare Modernization Act of 2003 to offer a proposal to rein in program spending. The act mandates that the president submit a Medicare reform plan if, for two consecutive years, 45% of the program's funding was projected to come from general tax revenues instead of dedicated payroll taxes or premiums within six years. The Medicare trustees projected in 2006 and 2007 that this would happen.

"This legislative package ... would take the first step of responding to the funding warning in the trustees' 2007 report," wrote Health and Human Services Secretary Mike Leavitt in a letter to House and Senate leaders. "Perhaps more importantly, it would begin to address the long-term challenge and lay the foundation for the comprehensive Medicare reforms that are necessary to strengthen and improve the program for future generations."

The bill, released Feb. 15, calls on Leavitt to work toward wider adoption of electronic medical records. It does not elaborate on Bush's long-standing goal of having a national health information network by 2014.

The provision on quality rankings would require HHS to publish reports on physicians, hospitals and health plans by 2013 for 50% of treatment paid for by Medicare.

The bill, called the Medicare Funding Warning Response Act of 2008, also reintroduces a medical liability proposal similar to a measure Congress failed to adopt in 2006. It would cap noneconomic damages at $250,000 and limit punitive damages to the greater of $250,000 or two times noneconomic damages. Leavitt said this would limit Medicare spending by discouraging defensive medicine.

Bush also proposes increasing Part D premiums for the wealthiest 5% of the 25 million drug program enrollees, starting with those earning $82,000 per year and couples making double that. AARP Advocacy Director David Sloane said the group objects to increasing beneficiaries' Part D cost sharing, especially because income levels used to calculate their new costs wouldn't be adjusted for inflation.

Congressional reaction to Bush's measure was split. Rep. John Dingell (D, Mich.), chair of the House Energy and Commerce Committee, said the bill wouldn't improve Medicare but would make seniors pay more for it. He also said the 2003 Medicare reform act's 45% threshold is an arbitrary Republican scare tactic designed to justify program cuts.

Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee, welcomed some of Bush's ideas. Baucus said he will not include the increased Part D cost sharing or medical liability proposals in Medicare reform legislation he's planning to introduce this spring. But he said he sees room for bipartisanship on better linking cost and quality in Medicare treatment.

"Value-based purchasing and health information technology are both smart targets for reforms in Medicare right now," he said. "But in the end, dealing with the rising cost of Medicare will mean controlling costs across our health care system as a whole."

Rep. Joe Barton (R, Texas), the senior Republican on Energy and Commerce, said the Bush bill deserves hearings. "The politically charged swirl of the 2008 presidential election campaign doesn't lend itself to good policymaking, but our committee should take the lead in doing what can be done -- hearing experts, establishing facts and exploring possibilities."

At press time, the Congressional Budget Office hadn't released an estimate of the bill's savings. Leavitt said the Part D cost-sharing provision would save $3.2 billion over five years by lowering federal premium subsidies. The average Part D plan costs beneficiaries $25 per month, said Centers for Medicare & Medicaid Services spokesman Jeff Nelligan.

Performance pay is complicated

The pay-for-performance provision in Bush's plan calls for HHS to use a portion of existing Medicare funding to reward doctors, hospitals and others based on "well-accepted" quality and efficiency standards. This type of reform is easier said than done, said the AAFP's Dr. King.

To start, gathering the data needed to support pay-for-performance won't be easy without electronic medical records, and EMR adoption won't happen quickly without financial help for small group practices, Dr. King said. The AAFP estimates that 50% of its members will have an electronic records system by the end of 2008, but most of the rest are physicians working alone or in small practices who can't afford these systems.

HHS also must coordinate with private insurance companies on quality standards, Dr. King said. "We really feel the parameters need to be more global. I don't want to do one for Medicare, another one for Blue Cross Blue Shield and another one for Cigna."

Finally, HHS needs to consider using the carrot of additional payments for meeting quality standards and not just the stick of reducing pay to physicians who don't, Dr. King said.

The president's bill would do the latter. "We think that's just inappropriate," Dr. King added.

AMA pay-for-performance principles say programs should ensure quality of care, foster the patient-physician relationship, offer voluntary physician participation, use accurate data and fair reporting, and provide fair incentives.