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Reps. Thomas, Johnson Ask for CMS Help in Changing Medicare's "Irrational" Payment System

House Ways and Means Committee Chairman Bill Thomas and the panel's Health Subcommittee Chairman Nancy L. Johnson have asked the Centers for Medicare and Medicaid Services for help in moving Medicare toward a "pay-for-performance" system.

"Today, Medicare pays providers the same whether they deliver excellent care or care that is ineffective, poor quality or out-of-date," the lawmakers wrote in a June 16 letter to Centers for Medicare and Medicaid Services Administrator Mark B. McClellan. "Unfortunately, since Medicare pays for resource use, we pay for more and more services when providers deliver ineffective and inefficient care. It is time to change this irrational system."

Pay-for-performance, or "P4P," pays a doctor or hospital more for higher scores on specific measures of performance, such as the percentage of heart attack patients who have been prescribed lifesaving beta-blocker drug therapy when they leave the hospital. Federal officials and policy wonks are touting pay-for-performance as a way to improve medical care for Medicare beneficiaries and spend federal health care dollars efficiently.

Thomas, R-Calif., and Johnson, R-Conn., asked CMS for help in developing quality indicators for providers such as physicians and in determining the size of incentives needed to encourage reporting of such quality indicators.

At its annual meeting in Chicago, the American Medical Association on Wednesday updated the group's principles and guidelines for pay-for-performance programs to include the need for pilot testing prior to implementation of such programs and a call for the programs to not penalize physicians "based on factors outside of the physician's control."

At a forum hosted Wednesday by the Blue Cross Blue Shield Association, officials of Blue Cross plans that offer "pay for quality" programs said the programs produced data that improved patient care, especially for individuals with chronic medical conditions such as diabetes, and would likely reduce health care costs over time.

"We believe we're on to something here," said Dr. Allan M. Korn, senior vice president and chief medical officer of the Blue Cross and Blue Shield Association.

Dr. Bruce E. Landon, associate professor of Harvard Medical School, who studied the Blue Cross Blue Shield pay for quality programs, said their savings may come in "benefits not measured in dollars" but rather in "increased quality of life."

Blue Cross and Blue Shield plans are offering physician pay for quality programs in 32 states and expect to implement programs in 14 additional states in the near future, according to a survey the Blue Cross and Blue Shield Foundation on Health Care released Wednesday.

Sixty-eight percent of eligible primary care physicians and 48 percent of the eligible specialists are participating, and the programs use a broad range of performance measures, such as HEDIS, member satisfaction indicators, and generic drug utilization.

The most common form of incentives, the study found, include lump-sum payments and fee schedule increases, and a limited but growing number of physicians are making their program results public.

As federal officials design pay-for-performance programs for Medicare providers, they should make sure to consult physicians and add extra money into the Medicare payment system to reward doctors for participating in such programs, said panelists at the Blue Cross and Blue Shield forum.

The Medicare Payment Advisory Commission (MedPAC), which advises Congress on payment issues, has urged lawmakers to establish a "quality incentive payment policy" for hospitals, home health agencies and doctors. MedPAC's recommendations include setting aside 1 percent of current payments and giving it to caregivers who improve the quality of their care or meet quality benchmarks.

Dr. Jon Shematek, medical director for quality improvement at CareFirst BlueCross BlueShield, said physicians are concerned that their Medicare payments might be reduced under a pay-for-performance system. Congress should provide "positive incentives and recognition" for physicians who participate, Shematek said.

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