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    Pay for performance bill packs a mixed bag of issues

    Bill replacing SGR and rewarding quality draws praise, concern

    Bob Gatty
    Washington—Legislation backed by AUA to abolish the controversial Sustainable Growth Rate (SGR) formula in the Medicare fee schedule also contains provisions designed to implement a payment system based on "pay for performance," a plan to compensate physicians according to the quality of care they provide.

    The bill, H.R. 3617, sponsored by Rep. Nancy Johnson (R-CT), chairman of the House Ways and Means Health Subcommittee, would "provide real reform to the way physicians are paid for their services in Medicare and give urologists the opportunity to receive the compensation they deserve for their high quality of service," according to an AUA memo to members. The objective of replacing the SGR with a formula based on the Medicare Economic Index (MEI) and implementing a new system of quality-based payments was supported by the American Medical Association during a Sept. 29 subcommittee hearing, but the AMA also expressed concern about some of the details.

    In addition, Robert A. Berenson, MD, a former senior official at the Centers for Medicare & Medicaid Services overseeing payment policy for providers who currently is senior fellow at the Washington, DC,-based Urban Institute, said it would take "years" to effectively implement such a plan, and said immediate action should be taken to eliminate fundamental problems that exist within the current system.

    The goal of eliminating the SGR appears to have momentum in the subcommittee and received strong support at the hearing. John H. Armstrong, MD, an AMA trustee, noted that a 4.4% Medicare physician pay cut is slated to take effect Jan. 1, 2006, the first of a series of cuts totaling 26% expected over the next 6 years.

    Outcome, process, structure

    Johnson's bill would replace next year's cut with a 1.5% increase, and would replace the SGR formula beginning in 2007 with "updates that reflect increases in medical practice costs," she said. (For more information on the implications for urology, see Urology Times, Oct. 1, 2005.)

    Johnson's bill would be a significant step toward the CMS goal of factoring in measures of quality and efficiency in determining physician payments. It would provide a differential payment update to practitioners meeting pre-established thresholds of quality or pre-established levels of improvement, equal to the MEI.

    "Practitioners not meeting these thresholds would receive an update of MEI, minus 1%," according to Johnson.

    Measures of quality and efficiency would include "a mix of outcome, process, and structural measures, including a requirement that clinical care measures be evidence-based, she said.

    "Practitioners would be directly involved in determining the measures used for assessing their performance," Johnson promised.

    AMA: Proceed with caution

    Under the bill, CMS would be required to analyze volume and spending growth annually and to make recommendations on regulatory or legislative changes in response to inappropriate growth. The Medicare Payment Advisory Commission would review the report and recommendations.

    Some concerns expressed by Dr. Armstrong on behalf of the AMA included:

    • A public reporting provision in the bill could be problematic. If not approached thoughtfully, public reporting can have unintentional adverse consequences for patients, including, for example, patient deselection in the case of those who, for a variety of reasons, are noncompliant. Further, health literacy may not be adequate to comprehend basic medical information.
    • Physicians must have the opportunity for prior review and appeal regarding any data that is part of the public review process, and physician comments should be included with any information released to the public.
    • Pilot testing of any such program should be completed before implementation. A limited demonstration program is being conducted by CMS, but AMA noted that it applies only to large group practices.
    • Efficiency measures "have the danger that the lowest-cost treatment will supersede the most appropriate care." AMA said efficiency measures must be "evidence-based, valid measures developed by the medical specialty societies in a transparent process."
    • A reliable method for risk adjustment is critical. Without it, there will not be an adequate reflection of a physician's performance.
    • More time is needed to phase in the new system.
    • Protection from additional administrative burdens on physicians is needed.

    It's not a panacea

    Dr. Berenson said that, "given the disappointing state of quality, where it can be measured, providing incentives for physicians to do better seems an appropriate response."

    "I generally applaud the goal of measuring physician performance, holding physicians accountable for deviations from desired performance, and, through publication of performance, helping Medicare beneficiaries make informed choices about which physicians they should seek care from," Dr. Berenson said. "However, there are formidable barriers to assessing performance at the individual physician level. Further, in the crucial areas of overuse and inefficient provision of services and in misuse—that is, errors of commission and faulty judgment—measures are in their infancy."

    Some of these barriers, Dr. Berenson said, involve the fact that many beneficiaries have multiple chronic conditions, not just a single one for which most guidelines and measures are directed. Moreover, he added, "for an 85-year-old, measures that focus on primary and secondary prevention are not particularly relevant, whereas measures appropriate to geriatric syndromes, eg, reducing falls, addressing incontinence and chronic pain, deserve priority."

    Dr. Berenson also doubted that physicians prone to gaming the system in order to maximize reimbursements would change their practices "to respond to a modest 1% to 2% change in payment."

    "Pay for performance is a worthy initiative, and I applaud the goal of trying to produce relevant and validated measures for each specialty," he said. "However, I expect that this objective, done correctly, would take many years."

    In addition, he said, provisions such as those proposed in the Johnson bill do not constitute an acceptable substitute for the SGR, "which, I think we all agree, needs to be replaced."

    Among the changes in the current system recommended by Dr. Berenson was a reduction in facility fees, which, he said encourage physicians to invest in ambulatory surgery centers, endoscopy suites, and diagnostic imaging and testing centers.

    Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.

    Bob Gatty
    Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.