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Money? What Money? CMS Setting Up Voluntary System for Physician Reporting of Quality Data

SEPTEMBER 29, 2005 -- Despite continuing uncertainty about whether Congress will act in coming weeks to block scheduled Medicare physician payment cuts, the Medicare program itself is moving ahead administratively with plans to overhaul the troubled physician reimbursement system. Centers for Medicare and Medicaid Services Administrator Mark B. McClellan said at a House hearing Thursday afternoon that his agency is setting up the "infrastructure" to allow doctors to voluntarily report data next year on the quality of care they provide.

Payment is likely to be reformed over the next several years by tying higher reimbursement to higher performance on selected measures of quality. While the money part of that equation is in question right now, McClellan said the quality measures needed in such a system are falling into place.

McClellan told the House Ways and Means Health Subcommittee that his people "have made considerable progress creating consensus around a set of primary quality measures." While measures for care provided by specialists are generally thought to lag considerably behind those for primary care, McClellan reported "substantial progress" on the specialty front as well.

"We now have 66 quality measures for 29 specialties," he said. "Those 29 specialties represent about 80 percent of Medicare physician spending." Although many of the standards have not gone through a consensus-setting process, they are "still of great value," McClellan said. "Physician reporting of these measures will help foster their acceptance in the medical community and help prepare physicians for their eventual adoption."

McClellan also said existing claims forms could be used as the vehicle to report the quality data, and that they also could be the basis for payment based on quality data.

The hearing shed little new light on prospects for legislation that would erase scheduled payment cuts and replace them with modest increases.

The American Medical Association is seeking a permanent overhaul of the payment system that would erase not only cuts next year but cuts scheduled for the six years after that. As part of that effort, the AMA is hoping CMS will agree to remove drug spending from the Sustained Growth Rate (SGR) formula used to calculate physician payment rates—a technical change that would sharply reduce the cost of a legislation permanently overhauling the SGR payment system.

McClellan said the agency is about to begin reviewing comments on that proposed change as it prepares to publish a final rule on physician payment next month. He noted that even if the agency were to remove drug spending from the formula retroactively, payment cuts would not be averted over the next two years. That step would lessen the legislative cost of a permanent overhaul, however.

To the extent that a "physician payment fix" came up at the hearing, the talk was about a two-year postponement of cuts. McClellan said that would give Congress time to review pilot projects that he said show considerable savings squeezed from payment incentives to improve the quality and efficiency of care.

But Rep. Pete Stark, D-Calif., showed no sense of urgency about fixing the SGR formula and the scheduled cuts it is generating. Stark mocked the idea that doctors are taking a financial hit under the SGR, saying that while payments per service might drop, doctors can more than make it up on the growing volume of services they provide to Medicare patients.

Yearly incomes of physicians are growing at a robust yearly rate, he said, adding that providing fee schedule payment increases for doctors will increase Medicare premiums for doctor care.

Robert Berenson, M.D., a former Medicare official, cautioned lawmakers that payment based on quality measures by itself would not control the volume of physician services and spending. Doctors who fail to provide quality care would take a hit of 1 or 2 percent to payments for a service, but could erase the impact by ordering an extra test or seeing another patient, he said.

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