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December 26, 2014

Linking payments to quality of care

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Both the government and private sectors are placing increased emphasis on linking payments for health care services to the level of quality of those services.

In July, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to add 28 new individual measures to the Physician Quality Reporting System (PQRS) - a program that is required by the Affordable Care Act. At the same time, CMS plans to remove 73 measures from the reporting system, leaving a total of 240 individual measures.

Generally, physicians who see Medicare patients are required to report only nine measures in three of six quality group domains. The six quality domains, which reflect the Department of Health and Human Services’ priorities for health care quality improvement, are:

  1. Patient and family engagement
  2. Patient safety
  3. Care coordination
  4. Population/public health
  5. Efficient use of health care resources
  6. Clinical process/effectiveness

CMS accepted comments on the proposed rule until September. The rule is expected to be finalized in November and take effect Jan. 1, 2015.

Penalties for not meeting goals

In the initial phase of the program, the focus is on reporting of data. Physicians who report the required data will receive 100 percent of the allowed amounts of Medicare reimbursements and are eligible for an additional incentive payment equal to 0.5 percent of allowed charges. Physicians (or physician groups) that do not satisfactorily report data in 2014 will have a 2 percent downward adjustment in reimbursement rates for 2016.

In future years, penalties will be imposed for not meeting quality guidelines. In 2017, the penalties (referred to in the regulations as "value-based payment modifier adjustments") will increase to 4 percent.

The quality indicators, including measure sets for different specialties, are available at cms.gov (search "measure codes").

In addition to modifying quality measures for physicians, CMS has increased the number of quality measures for Accountable Care Organizations (ACOs) from 33 to 37. The focus of the new ACO quality measures will include: avoidable hospital admissions for patients with multiple chronic conditions, heart failure and diabetes, depression remission and readmissions to skilled nursing facilities.

Incentives to coordinate care

Improved coordination of care is one of the goals of the Medicare system. To that end, CMS plans to make separate payments to providers for non-face-to-face services for Medicare beneficiaries with two or more significant chronic conditions. The chronic care management services include communication with other treating health care professionals, revision of care plans and medication management.

Under the proposal, beginning in 2015, payments for such services by a physician’s office would be approximately $42 and could be billed no more than once per month per patient. Beginning in 2016, Medicare will pay more for telehealth services in order to promote care in rural areas.

CMS also is making close to $1 billion in grants to states to promote innovations in health care delivery. In Maine, for example, CMS will pay $33 million for a 42-month program that will include development of multi-payer ACOs and increased alignment between primary care, public health, mental health and long-term care. The funding also will cover enhancements of data analytic structures and transparency of quality reports.

Increased fees paid by Blue Cross

Blue Cross and Blue Shield companies (of which there are 37) are spending $65 billion per year in programs that provide incentives for better health outcomes. That represents approximately one out of five medical claim dollars paid by Blue Cross.

Blue Cross cites studies that report that 30 percent of health care expenditures goes to care that is ineffective or redundant. Through its incentive program, Blue Cross seeks to reduce that amount. The companies report success in lowering infection rates, lowering unnecessary emergency room visits, and reducing hospital stays.

Like the federal government, Blue Cross seeks to promote coordinated care. CareFirst, Blue Cross’s Patient-Centered Medical Home program, pays providers a 12 percent increase in the fee schedule in exchange for the added efforts and time spent coordinating care, particularly for the sickest patients.

Impact of socioeconomic factors

A controversy in the pay-for-performance movement is the degree to which socioeconomic factors should be considered in setting payments. Persons with low income, low education, and persons in some racial groups often have more negative outcomes. Physicians and hospitals that treat such populations may be financially penalized by the use of traditional across-the-board quality measures.

The National Quality Forum, which evaluates quality measures for the Medicare system, issued a draft report advocating consideration of what it terms "sociodemographic factors." The forum said that not adjusting for sociodemographic factors "could lead to greater disparities in care, due to disadvantaged populations losing access to care as providers become more hesitant to treat them."

On the other hand, some comments submitted about the report objected to the use of sociodemographic factors, arguing that they could lead to different - and inferior - standards of care for certain population groups. CMS will consider the report in its future rule-making.

Possible cut in payments

In another development, CMS announced that payments to physicians for Medicare services will be cut by 20.9 percent on April 1, 2015, if Congress does not intervene. This is the result of a 1997 law that contains the Sustainable Growth Rate formula. Nearly everyone in Congress agrees the formula does not work and should be replaced, but Congress has not reached agreement on how.

In the mean time, for each of the last 11 years, Congress has passed temporary measures that suspended payment cuts and usually provided a moderate increase in payments for physicians. The same thing is likely to happen in 2015 unless Congress enacts a permanent fix.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.



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