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Medicare May Begin Contacting Inefficient Doctors in Mid-2008

By John Reichard, CQ HealthBeat Editor

May 10, 2007 -- The Medicare program has the data and the computer capacity to identify individual doctors who are inefficient compared with their peers and may begin contacting them as soon as mid-2008 to goad them to become more efficient, a top federal official testified Thursday.

"It's an ambitious goal, but I think we need to set ambitious goals if we're moving forward in this important reform area," said Herbert Kuhn, acting deputy administrator for the Centers for Medicare and Medicaid Services.

Kuhn testified at a hearing called by House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., to find new ways to control the growth in the volume of office visits, tests, and procedures that doctors order for Medicare beneficiaries. There's widespread agreement that the current method for doing that—cutting payments if volume exceeds a yearly spending target—isn't working.

"To churn the data is probably the smallest part" of the job, Kuhn said when asked by Stark whether CMS has the resources to identify inefficient doctors. Kuhn suggested that the bigger job will be using the data to educate doctors about how to practice more efficiently and who to enlist in that effort, whether they be medical societies or "Quality Improvement Organizations" that contract with Medicare to improve care.

Called "profiling," the evaluations would involve seeing how many tests and procedures a doctor orders for a particular type of patient compared with his or her peers while getting the same treatment outcome.

Stark voiced interest in quickly getting information out to doctors about how their efficiency compares with that of other groups or other individual doctors.

Backers of profiling say doctors often become more efficient when presented with comparative data on their care giving, since it encourages them to conform to the ways in which their more efficient peers treat patients.

Also testifying in support of profiling was Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission, and Bruce Steinwald, director of health care at the Government Accountability Office.

Steinwald agreed that CMS has the capacity to begin profiling doctors and said Medicare could see savings as a result. But fully realizing profiling's ability to restrain volume growth would involve tying payment to efficiency, he said. Taking that step would almost surely require legislation to give CMS the appropriate authority, Steinwald said.

Recent reports by the GAO and MedPAC "really begin laying out a roadmap about how we can get that kind of information out there," Kuhn said after the hearing. He said he thought CMS could provide feedback to doctors without new legislative authority, and that the measuring effort would be "broad scale," reaching as many physicians as possible, "if not all physicians."

"We'd be happy" to talk to Stark and his staff about legislation this year taking the further step of tying payment to efficiency, Kuhn said.

Questions remain, however, about the feasibility of profiling, including whether CMS will have the resources to do the job and the reaction of the physician community. Steinwald said profiling would be resource-intensive, indicating that CMS would need more funding to support the effort.

Anmol S. Mahal, president of the California Medical Association, drew a distinction between a program that "provides confidential feedback to physicians as a tool for self-improvement and a comparison program that ties reimbursement to efficiency." California doctors support the educational aspects of peer comparison, but because of the complexity of making accurate comparisons, Medicare should test efficiency-based payment in a pilot project before adopting it widely, he said.

John E. Mayer, president of the Society of Thoracic Surgeons, expressed doubt that Medicare could accurately account for differences in the health status of patients when comparing physicians on their efficiency of treatment.

Witnesses at the hearing also expressed support for other methods of controlling volume growth, including paying for "bundles" of services rather than individual services, improving the accuracy of payments, and paying doctors to coordinate the care of chronically ill patients.

Mayer said that bundled payment for treating a particular condition "would shift the incentives from the current system that pays 'a la carte' for each service or test," which encourages "ever more to be performed." A bundled payment also would create an incentive "to keep the patient healthy while performing only the most appropriate and helpful tests and procedures."

MedPAC's Hackbarth faulted "large errors" in Medicare payment accuracy for fueling some volume growth. For example, Medicare payments for imaging may be too high because they do not account for lower costs that come with high usage rates for imaging devices, he said.

Robert Berenson, a senior fellow at the Urban Institute, agreed. "Because of the failure to consider that the cost of providing a service such as an MRI scan is reduced with every scan performed, Medicare's reimbursements overpay and create an incentive for ordering and providing too many such scans," he said.

Hackbarth also expressed concern about underpayment of family physicians for providing cost-effective care. Those underpayments are leading too few medical students to go into primary care, he said.

Hackbarth urged another step to control the volume of services, investing money in research comparing the effectiveness of various types of drugs, devices, and medical procedures. There's no panacea for rising volume, he said—"there's much to be done on many fronts."

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