McClellan Details Pay-For-Performance Plans for Medicare Providers, USA

Main Category: Medicare / Medicaid / SCHIP
Article Date: 29 Jun 2005 - 0:00 PDT

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CMS Administrator Mark McClellan in a letter to two House Republicans "detailed his agency's plans" to implement a pay-for-performance system for Medicare providers,... CQ HealthBeat reports. House Ways and Means Committee Chair Bill Thomas (R-Calif.) and Rep. Nancy Johnson (R-Conn.) in a June 16 letter to McClellan requested help with efforts to move Medicare toward a pay-for-performance system. In his response, McClellan provided specifics on the development of quality indicators, systems that would be used to report quality indicators and the size of incentives necessary to encourage reporting. McClellan wrote, "Linking a portion of Medicare payments to valid measures of quality, using the kinds of approaches summarized here, would support better health care. These direct incentives would foster the development and implementation of innovative ideas and approaches that will result in improvements in the health care that our beneficiaries receive." McClellan said that CMS has contracted with ABT Associates to create a pay-for-performance demonstration project for skilled nursing facilities. He also said CMS has been working with provider groups and others involved in home health care and care for patients with end-stage renal disease. In addition, McClellan noted that the "entire starter set of ambulatory care measures are now in the final stages of endorsement" and that the measures are intended to rate performance in primary care and some specialty areas. Medicare ultimately hopes to have performance measures for specialties that account for about 90% of Medicare physician spending. McClellan also said providers might need only "limited adjustments" in pay as incentive, noting that increased payments of 0.4 percentage points were sufficient to persuade hospitals to submit quality data. In addition, increases of 1% to 2% motivated hospitals to improve quality. Finally, McClellan said CMS is planning to launch a pilot test using claims data to measure physicians' use of health care services and soon will use the data to compare physicians' performance. One health care lobbyist said the detail provided by McClellan in his response shows he likely will not wait for congressional approval before moving ahead with pay for performance in Medicare (CQ HealthBeat [1], 6/27).

Competitive Contracting
In related news, CMS officials on Monday issued an interim final rule for the administration of drugs to Medicare beneficiaries in physician offices. Beginning Jan. 1, 2006, physicians who administer drugs to Medicare beneficiaries will be able to choose whether to participate in a new competitive acquisition program, which will provide drugs to doctors from vendors selected by Medicare through competitive contracting. In a release, McClellan said, "The program frees physicians from the administrative work of purchasing and procuring drugs in their offices, so that they can focus more time and resources on providing the best treatments for their patients." The program will apply to physician-injectable drugs covered under Medicare Part B that are generally provided "incident" to a physician's service. Self-administered drugs or drugs covered under the new Medicare drug benefit will not be part of the program, according to CQ HealthBeat (CQ HealthBeat [2], 6/27).

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