Pay for performance bill packs a mixed bag of issues

November 1, 2005

Washington--Legislation backed by AUA to abolish the controversial Sustainable Growth Rate (SGR) formula in the Medicare fee schedule also contains provisions designed to implement a payment system based on "pay for performance," a plan to compensate physicians according to the quality of care they provide.

The bill, H.R. 3617, sponsored by Rep. Nancy Johnson (R-CT), chairman of the House Ways and Means Health Subcommittee, would "provide real reform to the way physicians are paid for their services in Medicare and give urologists the opportunity to receive the compensation they deserve for their high quality of service," according to an AUA memo to members. The objective of replacing the SGR with a formula based on the Medicare Economic Index (MEI) and implementing a new system of quality-based payments was supported by the American Medical Association during a Sept. 29 subcommittee hearing, but the AMA also expressed concern about some of the details.

In addition, Robert A. Berenson, MD, a former senior official at the Centers for Medicare & Medicaid Services overseeing payment policy for providers who currently is senior fellow at the Washington, DC,-based Urban Institute, said it would take "years" to effectively implement such a plan, and said immediate action should be taken to eliminate fundamental problems that exist within the current system.

Outcome, process, structure

Johnson's bill would replace next year's cut with a 1.5% increase, and would replace the SGR formula beginning in 2007 with "updates that reflect increases in medical practice costs," she said. (For more information on the implications for urology, see Urology Times, Oct. 1, 2005.)

Johnson's bill would be a significant step toward the CMS goal of factoring in measures of quality and efficiency in determining physician payments. It would provide a differential payment update to practitioners meeting pre-established thresholds of quality or pre-established levels of improvement, equal to the MEI.

"Practitioners not meeting these thresholds would receive an update of MEI, minus 1%," according to Johnson.

Measures of quality and efficiency would include "a mix of outcome, process, and structural measures, including a requirement that clinical care measures be evidence-based, she said.

"Practitioners would be directly involved in determining the measures used for assessing their performance," Johnson promised.

AMA: Proceed with caution

Under the bill, CMS would be required to analyze volume and spending growth annually and to make recommendations on regulatory or legislative changes in response to inappropriate growth. The Medicare Payment Advisory Commission would review the report and recommendations.

Some concerns expressed by Dr. Armstrong on behalf of the AMA included:

It's not a panacea

Dr. Berenson said that, "given the disappointing state of quality, where it can be measured, providing incentives for physicians to do better seems an appropriate response."

"I generally applaud the goal of measuring physician performance, holding physicians accountable for deviations from desired performance, and, through publication of performance, helping Medicare beneficiaries make informed choices about which physicians they should seek care from," Dr. Berenson said. "However, there are formidable barriers to assessing performance at the individual physician level. Further, in the crucial areas of overuse and inefficient provision of services and in misuse-that is, errors of commission and faulty judgment-measures are in their infancy."

Some of these barriers, Dr. Berenson said, involve the fact that many beneficiaries have multiple chronic conditions, not just a single one for which most guidelines and measures are directed. Moreover, he added, "for an 85-year-old, measures that focus on primary and secondary prevention are not particularly relevant, whereas measures appropriate to geriatric syndromes, eg, reducing falls, addressing incontinence and chronic pain, deserve priority."

Dr. Berenson also doubted that physicians prone to gaming the system in order to maximize reimbursements would change their practices "to respond to a modest 1% to 2% change in payment."

"Pay for performance is a worthy initiative, and I applaud the goal of trying to produce relevant and validated measures for each specialty," he said. "However, I expect that this objective, done correctly, would take many years."

In addition, he said, provisions such as those proposed in the Johnson bill do not constitute an acceptable substitute for the SGR, "which, I think we all agree, needs to be replaced."

Among the changes in the current system recommended by Dr. Berenson was a reduction in facility fees, which, he said encourage physicians to invest in ambulatory surgery centers, endoscopy suites, and diagnostic imaging and testing centers.

Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.