Medicolegal Issues

Benefit Quest


The federal government is moving toward offering monetary rewards for reporting on specific performance indicators. When hospitals begin to seek those rewards, hospitalists will be integrally involved.

The Centers for Medicare and Medicaid Services (CMS) has been tasked with developing an approach to value-based purchasing (VBP) for Medicare hospital services beginning in fiscal year 2009. Once the proposal is complete and approved by Congress, hospitals will receive differential payments tied to their performance.

VBP is similar to pay for performance (P4P) in that it links a bonus payment to reporting on performance of specific procedures. But the payment in this case is awarded to a hospital rather than a physician. The goals for the CMS proposal include:

  • Improve clinical quality;
  • Address underuse, overuse, and misuse of services;
  • Encourage patient-centered care;
  • Reduce adverse events and improve patient safety;
  • Avoid unnecessary costs;
  • Stimulate investments in structural components and the re-engineering of care processes;
  • Make performance results transparent to and usable by consumers; and
  • Avoid creating additional disparities in healthcare and work to reduce existing disparities.

CMS has hosted two listening sessions on the VBP program, during which healthcare providers were able to directly offer suggestions and opinions. The latest information, including an options paper based on the first listening session, is available online at

“I was impressed with their responsiveness to the feedback they received at two listening sessions,” says Gregory B. Seymann, MD, associate clinical professor, University of California, San Diego School of Medicine, Division of Hospital Medicine, and a member of SHM’s Public Policy Committee. “I can see that the second options paper incorporates a lot of the comments from the first session.”

Aligning Measures

SHM has expressed support for CMS’ VBP proposal in a letter to the agency that also urged CMS to select candidate measures for hospitals that align with those for individual physicians under the Physician Quality Reporting Initiative (PQRI), which started July 1.

“These are very similar programs; one rewards hospitals for performing certain processes of care, and one rewards physicians for performing certain processes,” Dr. Seymann explains. “We’re simply asking CMS to make sure the measures [in VBP] match up with what physicians are asked to do. Many people voiced the same comment in the listening session.”

Although there are just 17 candidate measures proposed for the first year of the VBP program, the expectation is to add a considerable number as the program continues. Many candidate measures are similar or identical to those in the PQRI, such as giving aspirin on arrival and giving aspirin, beta-blockers, and ACE inhibitors on discharge for patients with acute myocardial infarction.

Additionally, the proposed measures are identical to those in the current P4P program most hospitals already participate in, known as Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU). The difference will be that instead of getting credit just for reporting the data as they do now, starting in 2009 hospitals must report publicly and perform at a certain level to get a payment update.

“Physicians, especially hospitalists, will need to watch this closely, as it is expected that the PQRI program, which is similar to RHQDAPU on the hospital level, will ultimately transition to a pay-for-performance program such as VBP,” says Dr. Seymann. “We can learn from the bumps in the road in the hospitals’ experience, and hopefully SHM can be active in ensuring that similar problems are anticipated prior to a physician-level pay-for-performance rollout. Furthermore, measures that will apply to hospitalists will likely mirror the hospital VBP measures.”

Rewards Program

Hospitals participating in the proposed VBP program can earn rewards based on two different criteria.

“This aspect is far and away the most important part of this program coming from CMS,” says Dr. Seymann. “They’ve learned from experience with the Premier [Hospital Quality Incentive Demonstration] project on hospital value-based purchasing that the hospitals that started out doing the best got the lion’s share of the reward because they were already doing well. Unfortunately, those that started at the bottom showed greater overall improvement but didn’t reach the top performance threshold, so they saw no financial recognition.”

So in the proposed VBP program, hospitals can demonstrate quality through overall performance on specific measures or through improvement over time in specific measures.

“Hospitals that reach the benchmark—the median of the top decile of performance—get the maximum number of points toward achieving the reward,” explains Dr. Seymann. “But hospitals can gain some points as long as they fall within the attainment range [between the 50th percentile and the mean of the top decile], proportional to how well they do. You get points for both the amount of improvement and the absolute attainment, and whichever score is higher comprises your score on that measure.”

Dr. Seymann calls this adjustment in the incentive structure “the most positive piece of this program,” explaining, “All hospitals have the opportunity to participate and to earn rewards.”

What It Means for Hospitalists

When VBP becomes a reality, how will that affect hospitalists?

“A lot of what hospitalists do for hospitals is improve quality,” says Dr. Seymann. “They’re likely to be asked to partner with their hospitals to put protocols in place for value-based purchasing. … Hospitals can’t make this work without physician participation, and a lot of hospital medicine groups are aligned with their hospitals on quality-improvement measures.”

It seems inevitable PQRI will morph into a CMS P4P or value-based purchasing program—or both. Whatever happens with these demonstration projects, hospitalists will be reporting on measures, and SHM wants to ensure those measures are appropriate.

“There are only 17 measures now; that’s a narrow sample to define quality at a hospital,” Dr. Seymann points out regarding VBP. “SHM will want to be involved in identifying gaps in care and recommending more measures in the future—like care coordination.” TH

Jane Jerrard also writes “Career Development” for The Hospitalist.

Policy Points

HHS Cornerstone Plan Gains Ground

The federal government, health plans representing 100 million Americans, and 97 of the nation’s top 200 corporations have pledged their support for an overhaul plan promoted by Health and Human Services Secretary Michael Leavitt. Also signing on are Medicaid programs in 18 states and the District of Columbia, collectively representing some 26 million enrollees, HHS reports.

Leavitt’s “four cornerstones” plan aims to revamp the healthcare marketplace. His four-point plan features a wider adoption of health information technology, standardized methods to measure quality of care, pricing information on individual medical procedures to allow their cost to be compared “apples to apples,” and payment incentives for providers to dispense higher-quality care and for consumers to choose care that offers the best value—the best combination of lower cost and higher quality.

Legislation on Kids and Quality

With all the attention being paid to quality initiatives, what about the children? Rest assured, some senators want pediatric patients to benefit from the type of quality measures included in CMS demos. The Children’s Health Care Quality Act (S.1226), introduced in May, would provide $100 million over five years for the development and testing of quality measures for children’s healthcare.

Sponsored by Sens. Evan Bayh, D-Ind., Orrin Hatch, R-Utah, Blanche Lincoln, D-Ark., along with Jeff Bingaman, D-N.M., Norm Coleman, R-Minn., and Ken Salazar, D-Colo., the Children’s Health Care Quality Act would not only provide support for private sector’s development of pediatric quality measure development, it would make it possible for CMS to fund demonstrations of evidence-based approaches to improve hospital care for children.

SHM Represented on AHRQ Council

SHM member and Public Policy Committee member Andy Fishman, MD, FACP, has been reappointed to AHRQ’s National Advisory Council. The council, which consists of 21 members from the private sector and seven ex-officio members from other federal health agencies, provides advice to Department of Health and Human Services (HHS) Secretary Mike Leavitt and AHRQ Director Carolyn M. Clancy, MD, on priorities for a national health services research agenda.

Upcoming topics for the committee include the new AHRQ improvement initiative, AHRQ’s role in involving consumers in healthcare, and enhancing the activities of the National Advisory Council. Dr. Fishman was reappointed in April, when Leavitt named six new members and reappointed two members to the council.

HIT for All

Congress is considering financial aid to help smaller practices adopt health information technology (HIT) in a big way.

Introduced in March, the National Health Information Incentive Act of 2007 would facilitate the development and adoption of national standards, and provide initial financial support and ongoing reimbursement incentives for physicians in smaller practices to adopt HIT, such as electronic medical records, to support quality improvement activities.

The bill includes one-time financial incentives such as grants, loans, and tax deductions, as well as sustained funding through changes in Medicare reimbursement. It would support continued use of technologies by authorizing an add-on payment to Medicare office visits when supported by such technologies and separate payment for e-mail consultations that meet defined standards of appropriateness.

CMS to Negotiate Drug Prices? Senate Says No

On April 18, the U.S. Senate failed to get the 60 votes needed to bring to a vote a bill that would have allowed the government to negotiate Medicare drug prices. Under the current Medicare Part D plan, private insurers handle price negotiations with pharmaceutical companies.

Some members of Congress—mostly Democrats—maintain that the federal government could use its clout to get lower drug prices than individual insurers. This, in turn, would lower the cost of Medicare for taxpayers and beneficiaries. However, many Republicans contend the program costs much less than expected because the private sector is conducting the negotiations. — JJ

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