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CMS Launches Era of Quality-Based Payment

By John Reichard, CQ HealthBeat Editor

July 27, 2010 – The payment system announced Monday for treating Medicare patients in dialysis facilities marks the first time the traditional Medicare program is varying payment levels based on the quality of care. While hospitals, doctors, and other providers have been paid higher rates for years for reporting data on the quality of their care, dialysis facilities will be the first providers to see payments rise or fall based on what such data shows.

The government is switching to a payment system that not only bundles more services into a single payment but also tries to improve the value Medicare gets for its spending by tying payment to quality.

Dialysis is supposed to remove toxins from the blood of patients with end-stage renal disease (ESRD) — in other words, in patients whose kidneys no longer function. The quality of their life depends on how effectively the procedure cleans out the toxins and the extent to which they suffer from conditions such as anemia that rob them of energy for basic daily activities.

The Centers for Medicare and Medicaid Services (CMS) has chosen three measures it will use to collect the data that will be used to vary payment: One assesses how well the facilities perform dialysis; the other two asses how well they manage anemia.

The first measure examines the reduction of urea, a toxin that results from the digestion of protein. The two anemia management measures assess levels of hemoglobin in the blood — levels should be neither too high nor too low. One of the two measures looks at the percentage of patients at a facility whose hemoglobin is less than 10 grams per deciliter of blood while the other looks at the percentage whose hemoglobin is greater than 12 grams per deciliter.

The ESRD payment rule announced this week establishes these measures in final form. However, certain elements of the “Quality Incentive Program” (QIP) system are not yet final. The agency has invited the public to submit comments.

For example, CMS is proposing a system for assigning facilities a total performance score. Depending on those scores, payments would be reduced by as much as 2 percent. A total score between 0 and 10 would lead to a 2 percent reduction of payments starting Jan. 1, 2012. At the other end of the scale, a score of 26 to 30 points would mean no reduction of payment.

CMS is inviting public comment on the scoring system through Sept. 24 and plans to issue a final QIP rule by the end of the year.

It’s the kind of drill other providers can expect to see in coming years as quality incentives move to other health sectors in the Medicare program.

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