Press Releases

MEDICARE ADDS PERFORMANCE-BASED PAYMENTS FOR PHYSICIANS

New Demonstration Program Tests Financial Incentives for
Improved Quality and Coordination in Small to Medium Sized Group Practices

The Centers for Medicare and Medicaid Services (CMS) today announced a new initiative to pay physicians for the quality of the care they provide to seniors and disabled beneficiaries with chronic conditions, reflecting the Administration’s ongoing commitment to reward innovative approaches to get better patient outcomes for the health dollar.

We intend to provide better financial support for quality care,” said CMS Administrator Mark B. McClellan, “Through this demonstration and the rest of our set of value-based payment demonstrations, we are finding better approaches to doing that than ever before.  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.”

As the next step in its efforts to make higher payments for better quality, CMS today announced the implementation of a new demonstration aimed at physicians practicing in solo or small to medium sized group practices. CMS has already implemented several other “pay-for- performance” demonstrations, including the Premier Hospital Quality Incentives Demonstration which involves acute care hospitals and the Physician Group Practice demonstration which involves 10 large multi-specialty group practices across the country.

“We know that most patients receive care in smaller medical practices,” said McClellan, “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.”

The Medicare Care Management Performance (MCMP) Demonstration was authorized under section 649 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).  It will be implemented in four states: Arkansas, California, Massachusetts, and Utah in 2007.

These four states also served as the four pilot states for the Doctor’s Office Quality – Information Technology (DOQ-IT) project which was implemented by CMS in conjunction with the Quality Improvement Organizations to promote the adoption of electronic health record systems and information technology in small to medium-sized physician practices and to help enhance quality of care.

Approximately 800 practices in the four states will be recruited to participate in this three-year demonstration.  In order to be eligible to participate, physicians must be the main provider of primary care to at least 50 fee-for-service Medicare beneficiaries in a solo or small to medium-sized group practice.

Under this demonstration, physician groups will continue to be paid on a fee-for-service basis.  Participating physicians will submit data annually on up to 26 quality measures related to the care of patients with diabetes, congestive heart failure, and coronary artery disease, as well as the provision of preventive health services such as immunizations and cancer screenings to high risk patients with a range of chronic diseases. In its first year, the program will be a “pay-for- reporting” initiative to provide baseline information on quality and to help physicians become familiar with the quality measurement process.  In subsequent years, based on their performance on the quality measures, practices will be eligible to earn an annual incentive of up to $10,000 per physician and up to $50,000 per practice year. 

The quality measures being used are similar to those being used in other CMS pay-for-performance demonstrations, and have been endorsed or are in the process of endorsement by the National Quality Forum and the AQA (formerly the Ambulatory Care Quality Alliance), and are consistent with the measures being used in Medicare’s Physician Voluntary Reporting Program.

Included among them are the percentage of diabetic patients whose cholesterol is under control and who are getting appropriate foot and eye exams, the percentage of congestive heart failure and coronary artery disease patients receiving appropriate medication therapy, and the percentage of high risk patients with chronic diseases getting appropriate immunizations and cancer screenings.  A complete list of the measures is available on the demonstration web site: http://www.cms.hhs.gov/DemoProjectsEvalRpts/MD/list.asp.

Based on the actuarial analysis underlying the demonstration program, improved performance on these clinical quality measures and the better quality of care that they reflect is expected to result in overall savings to the Medicare program owing to reduced admissions to hospitals and emergency rooms as well as delayed onset or avoidance of complications from these serious chronic conditions.

The demonstration will last three years and an independent evaluation, funded jointly by CMS and the Agency for Healthcare Research and Quality, will be conducted to determine the impact of the demonstration on quality of care, outcomes, and Medicare expenditures.  In addition, as required by the legislation authorizing this demonstration, the Secretary shall submit a report to Congress within one year after the date of completion of the demonstration program.

CMS already is conducting a pay-for-performance demonstration involving practices with 200 or more physicians.  Early results from the Premier Hospital Quality Incentive Demonstration have shown quality of care improvement in hospitals under a pay-for-performance system.  In addition to the initiatives for hospitals, physicians, and physician groups described above, CMS is developing a value-based purchasing demonstration for nursing homes – building on the progress of the Nursing Home Quality Initiative – and for home health and dialysis providers as well.

CMS is continuing to collaborate with a wide range of other public agencies and private organizations that have a common goal of improving quality and avoiding unnecessary health care costs, including the AQA and the Hospital Quality Alliance, the National Quality Forum, the Joint Commission on Accreditation of Health Care Organizations, the Agency for Health Care Research and Quality, the American Medical Association, and many other organizations.  CMS is also providing technical assistance to a wide range of health care providers through its Quality Improvement Organizations.

Further information on all of these demonstrations and Medicare’s collaborations to improve quality of care is available at: http://www.cms.hhs.gov/DemoProjectsEvalRpts/MD/list.asp.