Medicare tests pay-for-performance

The AMA urges focus on quality improvement over cost control in the demonstration project.

By David Glendinning, AMNews staff. Feb. 21, 2005.

Washington -- Doctors might want to pay close attention to how Medicare reimburses 10 large physician practices over the next three years. One day, this could be how the federal government pays many of the program's participants.

The Centers for Medicare & Medicaid Services this month revealed the names of the practices that will be participating in the first public pay-for-performance demonstration for physicians.

CMS, which plans to launch the project in April, will encourage the groups to lower Medicare costs and improve health care quality by offering to return to physicians a portion of the money that they save the government program.

"It is time that we pay for the quality of the health care provided to our beneficiaries, not simply the amount," said CMS Administrator Mark McClellan, MD, PhD. "We are working to apply this in every setting in which Medicare and Medicaid pays for care."

To attain project goals, participating practices have proposed several methods, such as disease management, to find efficiencies in health care delivery and to improve patient outcomes in a way that cuts down on the number of needed services over the long run. Already, some groups have achieved similar successes with privately insured patients.

Several doctors who will direct these strategies suggested that such a move is long overdue in Medicare.

"Under the current system, practices are paid only according to how much they provide, and there's absolutely no incentive for them to limit care," said Michael Hillman, MD, a neurologist and the medical director of quality improvement and care management at Marshfield (Wis.) Clinic. "One of the biggest obstacles that we've had in health care is defining and paying for the performance that we want out of the health care system."