MEDICARE ADDS PERFORMANCE-BASED PAYMENTS FOR PHYSICIANS IN FOUR STATES

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New Demonstration Program Tests Financial Incentives for
Improved Quality and Coordination in Small to Medium Sized Group Practices

The Centers for Medicare and Medicaid Services (CMS) today announced a new initiative to pay physicians for the quality of the care they provide to seniors and disabled beneficiaries with chronic conditions, reflecting the Administration’s ongoing commitment to reward innovative approaches to get better patient outcomes for the health dollar.

We intend to provide better financial support for quality care,” said CMS Administrator Mark B. McClellan, “Through this demonstration and the rest of our set of value-based payment demonstrations, we are finding better approaches to doing that than ever before. This is another important step toward paying for what we really want: better care at a lower cost, not simply the amount of care provided.”

The Medicare Care Management Performance (MCMP) Demonstration was authorized under section 649 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). It will be implemented in four states: Arkansas, California, Massachusetts, and Utah in 2007.

Under this demonstration, physician groups will continue to be paid on a fee-for-service basis. Participating physicians will submit data annually on up to 26 quality measures related to the care of patients with diabetes, congestive heart failure, and coronary artery disease, as well as the provision of preventive health services such as immunizations and cancer screenings to high risk patients with a range of chronic diseases. In its first year, the program will be a “pay-for- reporting” initiative to provide baseline information on quality and to help physicians become familiar with the quality measurement process. In subsequent years, based on their performance on the quality measures, practices will be eligible to earn an annual incentive of up to $10,000 per physician and up to $50,000 per practice year.

CMS already is conducting a pay-for-performance demonstration involving practices with 200 or more physicians. Early results from the Premier Hospital Quality Incentive Demonstration have shown quality of care improvement in hospitals under a pay-for-performance system. In addition to the initiatives for hospitals, physicians, and physician groups described above, CMS is developing a value-based purchasing demonstration for nursing homes – building on the progress of the Nursing Home Quality Initiative – and for home health and dialysis providers as well.

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