Medicare to Tie Physician Pay to Quality, Cost

Approximately 20,000 physicians in four Midwest states recently had a sneak peak at their financial future. According to Kaiser Health News, they were e-mailed links to Medicare reports detailing the amount their patients cost on average as well as the quality of the care they provided.  Additionally, the reports showed how Medicare spending on each doctor’s patients compared to their peers in Kansas, Iowa, Missouri and Nebraska.

The so-called “resource use” reports, which Medicare eventually plans to distribute to doctors nationally, are one of the most visible phases of the government’s efforts to enact a complex and delicate although little-known proviso of the Patient Protection and Affordable Care Act (ACA): paying more to doctors who provide quality care at lower cost to Medicare, and cutting payments to physicians who add to Medicare’s costs without improved results.

Requiring providers to pay closer attention to cost and quality is seen as crucial if the nation is to succeed at controlling its healthcare spending — currently more than $2.5 trillion a year.  It’s also vital to Medicare’s solvency.  Efforts are already underway to transform the way Medicare pays hospitals, physicians and other providers who agree to work together in accountable care organizations.  This fall, Medicare – which covers 47 million seniors and disabled people — will fine-tune hospital reimbursements based on quality of care.  It plans to take cost into account as early as next year.

But applying these same precepts to doctors is much more difficult, experts agree. Doctors see far fewer patients than do hospitals, so making statistically accurate assessments of doctors’ care is much harder. Comparing specialists is tricky, since some focus on particular kinds of patients that tend to be more costly.  Properly assessing how a physician impacts costs must include not just the specific services provided, but also care other providers may give.

“It may be the most difficult measurement challenge in the whole world of value-based purchasing,” said Dr. Donald Berwick, the former administrator of the federal Centers for Medicare and Medicaid Services (CMS).  “We do have to be cautious in this case.  It could lead to levels of gaming and misunderstanding and incorrect signals to physicians that might not be best for everyone.”

Dr. Michael Kitchell, a neurologist and chairman of the McFarland Clinic in Ames, IA, predicted that the Medicare reports “will be a huge surprise to almost every physician.”  That’s because the calculations of how much those doctors’ patients cost Medicare not only include the services of the individual doctor but of all the physicians who provided any treatment to the patient.  Kitchell said his own patients typically saw 13 other physicians.  “You’re a victim or a beneficiary of your medical neighborhood,” Kitchell said.  “If the primary-care doctors are doing the preventative screening tests, you’ll get credit for that, but if you’re in a community where the community doctors are doing a poor job, you’re going to look bad.”

Medicare officials are attempting to improve the way they measure physicians as they follow the ACA’s directive to phase in the new payment system, called a Physician Value-Based Payment Modifier, which is scheduled to begin in 2015.  At first, it will apply solely to physician groups and some specialists selected by the government; by 2017, the payment change is intended to apply to most if not all doctors.  The assessment “is a very important change we’re putting into place, one where we’re going to need a lot of feedback and deliberation,” said Jonathan Blum, CMS’s deputy administrator. “We’re not blind to the challenges that are coming toward us.”  Although the program is still being worked out, it will become reality for many doctors in January, because CMS wants to base its 2015 bonuses or penalties on a doctor’s patients’ outcomes during 2013.

Private insurers may decide to use a formula similar to Medicare’s, said Paul Ginsburg, president of the Center for Studying Health System Change.  Medicare’s ultimate method of judging and paying physicians could become “a valuable asset for private insurers, with a tool that will be somewhat bulletproof, that physicians won’t attack because they’ve been part of the process of developing them.”

Getting physician support might not be a peace of cake, said Margaret O’Kane, president of the National Committee for Quality Assurance.  “Doctors are a very powerful political segment,” she said. Additionally, “Patients are not behind this agenda.  The public is very scared about managing costs.”

Dana Gelb Safran, who measures quality for Blue Cross Blue Shield of Massachusetts, doubts it will be possible for the government to judge individual doctors.  “There really are very few measures that we can reliably evaluate on the individual doctor level,” she said.  “When they move forward with the value-based modifier, there is going to have to be a way to allow physicians to identify other physicians with whom they say they practice and who they say they share clinical risk for performance.”

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