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Medicare Prepares to “Pay for Performance”


This year, interested physicians will participate in Medicare’s first ever pay-for-performance program. Legislation passed in late 2006 calls for a voluntary Medicare quality reporting program that financially rewards physicians reporting on specific quality measures. Those physicians may receive a bonus of 1.5% of their total Medicare payments during the reporting period. This adds a pay-for-performance component to the current Physician Voluntary Reporting Program (PVRP) that the Centers for Medicare and Medicaid Services (CMS) established in January 2006.

“Medicare is really serious about improving quality of care for beneficiaries, and they’re committed to pay for performance as the way to go about it,” says Patrick Torcson, MD, MMM, FACP, medical director, Hospital Medicine, St. Tammany Parish Hospital, Covington, La.

Reporting in 2008

HR 6111 also establishes a Medicare reporting program for 2008, under which physicians would report with respect to quality or structural measures, including those related to use of healthcare information technology. The measures for the 2008 program must be adopted or endorsed by the National Quality Forum, the Ambulatory care Quality Alliance, and the AMA Physician Consortium for Performance Improvement.

Performance Measures in the Works

The pay-for-performance quality reporting program will use the 66 unique clinical measures CMS announced in December 2006, with additional modifications to be made through April 2007 using a consensus process.

“From looking at the proposed list of 66 performance measures, we’ve identified seven that are going to be available to hospitalists to report,” says Dr. Torcson. “The seven involve stroke and [myocardial infarction] care.”

Most of the internal medicine-related measures of the 16 included in the original PVRP were designed for an outpatient, office-based practice, and that seems true of the expanded list as well.

The current 66 measures are slightly more relevant to the hospital setting and can potentially be reported by hospitalists, as Dr. Torcson specified. Specifically, quality measures have been added for giving beta-blockers upon admission (quality measure #29) and for stroke and stroke rehabilitation (quality measures #31-#36).

Other measures are expected to be added before the July implementation date, and some may be reportable by hospitalists. These include creation of an advance care plan (#47) and measures for emergency medicine services (#54-#59).

“Medicare plans to have specific performance measures for each of the 39 specialties that they recognize,” explains Dr. Torcson. “Hospital medicine is not yet a CMS-recognized specialty; we’re typically lumped under general internal medicine.”

You can view all the measures at

P4P in the Private Sector

As of late 2006, there were more than 150 private sector pay-for-performance healthcare programs nationwide, according to Robert Galvin, director of global healthcare for General Electric. Galvin, in a briefing sponsored by the Alliance for Health Reform, said that approximately 80% of hospitals and physicians are involved with these programs. He believes that employers have become interested in pay-for-performance programs because they realize companies must not only work to control rising healthcare costs but must also improve the quality of care provided for their workers.


How the Program Will Work

The initial reporting period set by the legislation is July 1 through December 31, 2007, and there will be an enrollment period before that for physicians who wish to participate. When a physician enrolls in the program, she will identify which measures apply to her. At that point, CMS will determine if a measure applies.

If less than three quality measures apply for a physician, then 80% reporting on those applicable measures is required to be eligible for the bonus. If four or more measures apply, the physician must report on at least three in order to be eligible.

Bonuses for voluntary reporting would be in a lump sum and won’t be paid until the first quarter of 2008. The method of payment may be subject to certain limits—and it may not offset the physicians’ administrative costs for reporting. Hospital medicine programs will have to consider whether the costs of reporting are worth the bonus.

SHM Involvement

SHM’s Public Policy Committee (PPC) and its Performance and Standards Task Force (PSTF) have been actively involved in getting measures included on the PRVP list that are applicable to hospitalists.

“SHM is a member of the AMA’s Physician Consortium for Performance Improvement (PCPI) and has representatives on work groups that have developed performance measures and will be revising and maintaining measures over time,” says Dr. Torcson. “We hope to eventually include measures that are specific to hospitalized patients.”

Personal Health Records for 2.5 Million

On December 6, 2006, a group of large employers, including Wal-Mart, BP America, Intel, Pitney Bowes, and Applied Materials, unveiled Dossia, a system the employers say will enable individuals to control their own medical data from multiple sources and to create and access their own personal, private, and portable electronic health records. The Web-based system will roll out in 2007 and will include medical records for a total of 2.5 million employees.

Dossia will allow the individual to develop a personal health record either by entering the data himself or by enabling the system to search and securely aggregate his health data from various sources. Once Dossia is complete, it will be able to pull information from all available electronic sources within the healthcare system.

Source: Major U.S. employers join to provide lifelong personal health records for employees [press release]. Dossia; December 6, 2006.

CMS Seeks Input on Value-Based Purchasing

CMS has requested input from hospitals on a new plan for Medicare hospital value-based purchasing, mandated under the Deficit Reduction Act. To date, verbal and written comments have been solicited regarding quality measures, data infrastructure and validation, incentives, and public reporting. For the latest information on the plan, visit

In addition to the PCPI, SHM is represented and has influence in the National Quality Forum and the Ambulatory Care Quality Alliance.

“SHM leadership—CEO Larry Wellikson, Eric Siegal, Public Policy chair, and Lakshmi Halasyamani, chair of the Hospital Quality and Patient Safety (HQPS) Committee—have been proactive in positioning SHM to be very involved in the national quality improvement agenda,” says Dr. Torcson. “It’s really a work in progress, but SHM is part of the work groups that are driving this process.”

The Effect on Hospitalists

As they can with the original PVRP, hospitalists can find a few applicable performance measures to report on, so they are eligible to participate—and SHM encourages them to do so.

“The amount of money will be small and the number of [applicable] measures will be limited and not truly representative of a hospitalist’s practice,” says Dr. Torcson, “but performance reporting should be something that every physician, including hospitalists, has as a skill set as their practice moves into the future.”

Moving Ahead

Details on the new program still need to be clarified by CMS in the first half of 2007. Regardless of the details still to be determined for this first major foray into Medicare pay for performance, one thing is clear: CMS is dedicated to the idea of tying financial reward to quality care. And they aren’t the only ones.

“Medicare is not as far along as private insurers,” says Dr. Torcson. “Commercial insurers are much more aggressive about pursuing physician-level performance and efficiency—I think we’ll see more impactful pay-for-performance plans from them first. However, the CMS model will affect 70 million patients, and commercial insurers have tended to use the CMS model for physician reimbursement.”

Dr. Torcson believes this program is simply a first step on that road. “We’re in the infancy of pay-for-performance models for physician reimbursement,” he says. “I think the ultimate model for physician-level value-based purchasing is going to look a lot different than the proposed CMS payment for reporting and payment for performance.”

In the immediate future, the PPC and PSTF will continue to participate in formulating the final quality measures for the CMS voluntary reporting program. Watch the SHM Web site for updates on the status of the program. TH

Jane Jerrard writes “Public Policy” for The Hospitalist.

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