Medicare, Money, and Quality Measures
The federal government—particularly the Centers for Medicare and Medicaid Services (CMS)—is moving faster than anyone thought possible to implement “value-based purchasing,” which ties payment to quality of care and other outcomes. CMS has a congressional mandate to make value-based purchasing a reality by fiscal year 2009.
“As Congress looks at cutting physician payments, they’re very open to alternative payment methods like pay-for-performance,” says Patrick Torcson, MD, MMM, FACP, chair of SHM’s Performance and Standards Task Force, medical director, hospital medicine, St. Tammany Parish Hospital, Covington, La. “There’s tremendous political will behind this.”
Here is an overview of three CMS demonstration programs in various stages that will determine which new payment models may shape your hospital budget—and your salary—in the future.
CMS Gainsharing Demo: An Update
As reported in the October issue of The Hospitalist, CMS has been charged with establishing six three-year gainsharing pilot programs, including two in rural settings, by January 1, 2007.
CMS invited applications for the programs in mid-September, and applications were due by November 17. The six participating hospitals will provide gainsharing payments to physicians who help to save costs. The gainsharing payments will be based on net savings. Each hospital will propose multiple approaches that will both save costs and improve quality and efficiency of care.
“Gainsharing could be a better quality incentive payment model for hospitalists, [but] maybe not for other specialties,” says Dr. Torcson.
New “Gainsharing Plus” Demo—Participation Encouraged!
During Legislative Advocacy Day at the SHM Annual Meeting in Washington, D.C., in May, SHM members personally urged policymakers to broaden the concept of gainsharing and initiate demonstration projects like this that promote physician and hospital collaboration in improving care.
Four months later (in early September) CMS surprised the healthcare community with the announcement of an additional three-year demonstration program that goes beyond the traditional concept of gainsharing—one that will examine whether allowing hospitals to provide financial incentives for physicians to support better care can improve patient outcomes without increasing costs.
“SHM was pleased to hear that CMS was offering this program because we support the development of these payment models,” says Dr. Torcson.
Under the program, known as the Physician-Hospital Collaboration Demonstration (PHCD), hospitals would be paid their usual inpatient rate for the patients’ care but would be allowed to pay physicians a portion of the savings resulting from quality improvement and efficiency initiatives.
In the CMS release announcing this demonstration, former CMS Administrator Mark B. McClellan, MD, PhD, was quoted as saying, “The most costly and intensive physician services are provided in hospitals, yet our payment systems do not support steps by hospitals and doctors to work together to improve care. This demonstration program will support efforts to track and improve the overall episode of patient care, including follow-up and longer-term outcomes.”
The program will begin in 2007, and applications are due by end of business on January 9, 2007. SHM encourages members to explore the possibility of applying for one of the demonstrations with their group and their hospital administrators. Details on the PHCD are available at www.cms.hhs.gov (go to the “Medicare” page and then click the “Demonstration Projects & Evaluation Reports” page. Then click “Medicare Demonstrations).”
