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Consider This When Designing That Medicare "Pay-for-Performance" Program

By Mary Agnes Carey, CQ HealthBeat Associate Editor

March 29, 2007 -- Efforts to establish a "pay-for-performance" system in Medicare may be complicated by the number of physicians Medicare patients typically see, according to a recent study published in the New England Journal of Medicine.

A Medicare patient seen by the typical physician in the nationally representative study was treated by seven different doctors in four different medical practices in a given year, according to the researchers at the Center for Studying Health System Change and Memorial Sloan-Kettering Center.

Only about 35 percent of beneficiaries' visits were with the doctor held responsible for their care under the most common "pay-for-performance" methodology used to assign patients to physicians. In addition, the assigned physician and practice changed from year to year for a third of beneficiaries.

Because so may different physicians and practices provide care to an individual Medicare patient, it is difficult to identify which provider is responsible for which patient. Physicians also are unlikely to have a critical mass of patients who are their primary responsibility and about a third of the patients they would be held responsible for will switch to a different provider the next year, according to the study, which was published in the March 15 issue of the New England Journal of Medicine.

"The study raises serious questions about how meaningful a Medicare pay-for-performance program would be for patients in the current fee-for-service system where care is so widely dispersed," said Hoangmai H. Pham, the study's lead author and senior health researcher at the Center for Studying Health System Change, a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.

"If physicians don't know which patient they have primary responsibility for ahead of time, and Medicare only figures this out after the fact, then it is hard to envision how [pay-for-performance] incentives will motivate physicians to improve the quality of care they deliver," Pham said in a statement.

Many lawmakers and health care analysts say linking Medicare reimbursement to the quality of care delivered would both improve health care services and lower costs. But some physicians have expressed concern over the design of performance measures and how they will be implemented.

In a statement, American Medical Association Board Chair Cecil Wilson said the AMA "is committed to always improving the quality of health care for patients, and as we examine ways to improve, this study adds to the body of knowledge on the challenges of pay-for-performance implementation in Medicare."

Using a variety of different methods to assign patients to physicians or practices, the New England Journal of Medicine study concluded that primary care physicians typically would be held accountable for 39 percent of the Medicare patients they treat and 62 percent of Medicare visits they bill. Medical specialists, who often provide more costly care, would be held accountable for 12 percent of the Medicare patients they treat and 20 percent of the total Medicare visits they bill.

Instead of using claims data to retrospectively assign patients to physicians, the study's authors suggest that Medicare consider prospectively assigning patients to physicians and practices to establish clearly which providers will be held accountable for coordinating patients' care.

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