Proposal would credit doctors for Medicare savings

The physician advisory council's plan aims to lessen the financial risk of pay-for-performance.

By David Glendinning, AMNews staff. July 4, 2005.

Washington -- A panel of doctors advising Medicare officials has recommended that the government move some of the money it saves under any future pay-for-performance system from the hospital side of the program to the physician side.

Some doctors believe that Medicare can use physician pay-for-performance to cut medical costs over the long run by reducing complications, hospitalizations and use of the emergency department, said Barbara L. McAneny, MD, an oncologist in Albuquerque, N.M. The potential funding problem arises because any such savings would be realized in Medicare Part A, or the inpatient side of the program, not in the outpatient Part B.

In an effort to address this disconnect, the Practicing Physicians Advisory Council recently approved a resolution authored by Dr. McAneny, a member of the panel, that proposes a shift of federal funds between the two closed systems. Under the recommendation, if physician pay-for-performance programs lead to fewer amputations or dialysis for diabetic patients, for example, the Centers for Medicare & Medicaid Services would funnel a portion of the money saved back into the funding stream that pays for doctors' services.

"As long as we are rewriting the way that Medicare pays for services anyway, this seems like the only opportunity to break down the original barrier between Part A and Part B," Dr. McAneny said. "If you're truly going to pay for performance, you need to do some gain sharing and say that some of this money will be put back into the Part B pot."