P4P cuts health care costs in CMS Medicare pilot
Coordinating care and reducing hospitalizations can lower Medicare costs, according to early results of a Centers for Medicare & Medicaid Services (CMS) study. The study began April 2005 and will run through April 2008 and is intended to examine how Medicare reimburses physicians for care with a focus on quality rather than on the number of tests and procedures performed.
In the study, CMS analyzed hospital and physician bills for 224,000 patients treated by 10 selected physician groups and compared them with bills from other doctors and patients in the same geographic areas.
Doctors in the experiment were required to meet certain quality criteria, such as adhering to 10 clinical measures for diabetes care. Clinical measures for heart disease care are being added to the experiment, as are measures for hypertension and basic preventive care.
Two groups qualify for bonuses
The results indicated that all 10 participating physician groups improved patient care during the first year. But only two of the 10—the University of Michigan Faculty Practice and the Marshfield Clinic in Wisconsin—met the threshold to qualify for bonus payments. The two groups were paid a total of $7.3 million, in addition to standard Medicare payments for services, for saving the program $9.5 million.
For each physician group practice, Medicare demonstration savings were calculated by comparing actual spending to the group's own base year per capita expenditures trended forward by a comparison group's expenditure growth rate. Case-mix adjustments were made to account for changes over time in the types of patients treated by the physician group and changes in the types of patients included in the comparison group. Cost and quality performance payments for the group are calculated if it achieves a Medicare savings of more than 2%. To determine quality performance payments, the demonstration includes 32 quality measures drawn from CMS' Doctor Office Quality project. Groups become eligible for payments by meeting threshold or improvement targets.
The demonstration includes 10 physician groups that cover all four Census regions. Each group has at least 200 doctors and together they represent more than 5,000 physicians. The groups include freestanding group practices, components of integrated delivery systems, faculty group practices, and a physician network organization made up of small and individual physician practices. Together they provide the largest portion of primary care services for more than 220,000 Medicare fee-for-service beneficiaries.
In addition to the Michigan and Wisconsin sites that received bonus money, the other participating groups are Billings Clinic, Montana; Dartmouth-Hitchcock Clinic, New Hampshire; Everett Clinic, Washington; Forsyth Medical Group, North Carolina; Geisinger Health System, Pennsylvania; Middlesex Health System, Connecticut; Park Nicollet Health Services, Minnesota; and St. John's Health System, Missouri.
Four themes emerged at a site conference sponsored by CMS and the Commonwealth Fund in April 2006, the end of the first study year:
1. Improving care management and coordination of care. Approaches include chronic disease management, high-cost/high-risk patient management, and transition management. Most of the participating physician groups have implemented chronic disease management programs for diabetes and heart failure. Those diseases are emphasized, conference participants said, because they have relatively high prevalence among Medicare beneficiaries, usually have room for improvement on quality measures, and also have potential to reduce costs. High-cost/high-risk patient management programs usually are more broadly defined than disease management programs, in that they usually target patients who have multiple chronic diseases, while disease management programs tend to focus on single diseases. Transitional care interventions include enhanced hospital and emergency department discharge planning to ensure that appropriate follow-up care is received and readmissions are avoided.
2. Expanding palliative and hospice care. Several of the participating physician groups have developed or explored programs for expanding access to palliative, hospice, or end-of-life care. Though currently underutilized for Medicare beneficiaries and other U.S. health care system patients, these initiatives are seen as having promise for reducing utilization of high-cost hospital care and improving patients' quality of life.
3. Modifying physician practice patterns and behavior. Physician behavior is central to reducing costs and improving quality of care, conference attendees said, given that physicians have the largest influence on patient treatment and resource utilization. All of the participating physician groups have considered ways to influence or modify physicians' practice patterns. They include modifying physicians' work processes, encouraging physicians to consider the health of a panel of patients rather than individual patients, and feedback reports to improve coordination and quality of care. The Commonwealth Fund conference report says a key challenge "is in identifying the optimal ways to modify clinical work processes, such as when physicians can delegate routine care to nurses or medical assistants."
4. Enhancing information technology. Most of the participating physician groups highlighted information technology innovations as critical for their success under the demonstration. Included are applications that identify and track high-risk patients, develop chronic disease patient registries, provide doctors with detailed reports on individual patients, prepare broader feedback reports, and give automated reminders to physicians or support staff on needed care. Some groups enhanced electronic medical records, while others focused on more limited and less expensive patient registries.
CMS has concluded that to date the demonstration has shown that it is possible for large multispecialty group practices to respond to a hybrid set of quality improvement and cost-containment incentives layered on top of a fee-for-service payment system. The physician groups have used the demonstration as a vehicle for expanding data systems, care management programs, coordination of care efforts, and other interventions that are not directly reimbursed in fee-for-service payments.
As Medicare's first pay-for-performance initiative for physicians, the demonstration enables doctors to provide the high-quality and appropriate services they would like to give their patients but frequently feel they are penalized for under the current health care financing system. CMS and Commonwealth Fund say the focus among participating physician groups is less on direct financial rewards for individual providers and more on getting the reimbursement system out of the way so doctors can provide services they know patients need.
Can it work in other formats?
CMS says a goal for the future is to develop ways to expand the demonstration approach to other practice formats. The physician group demonstration model is a provider-based approach to Medicare reform. Incentives are given directly to providers, they are put in charge of managing patient care, and they share the rewards of improving quality and efficiency. Participating provider groups may contract with external organizations such as care management, disease management, and patient monitoring companies to assist in patient care management activities, but that is at the discretion of the providers. No private insurance companies are involved to act as intermediaries between Medicare and the provider groups. And Medicare beneficiaries' insurance arrangements are not affected in any way.
The Commonwealth Fund conference report says a barrier to previous private sector attempts to establish direct financial incentives for quality and efficiency for providers has been the inability of many provider organizations to accept financial risk for patient care. The current demonstration addresses that concern by not having a downside penalty for underperformance. Rather, it tests whether a provider-based approach emphasizing incentives rather than punishment will prove effective in enhancing the quality and efficiency of care Medicare beneficiaries receive.
CMS acting deputy administrator Herb Kuhn said the agency wanted to "reward providers for the right care at the right time" and said he was "very, very pleased with the first year results." Kuhn said while the available results are only from the first of three years, they are "trending in a very positive way."
Estimated savings of $21 million
While Medicare has not calculated the experiment's overall savings, the physician groups said the 10 groups together saved the program some $21 million.
But even the groups able to achieve savings say the program's complexity and the time elapsed since the first-year test period ended makes it difficult to respond to the potential financial incentives. "The financial model for this program may not be viable," said Caroline Blaum, the physician leading the effort at the University of Michigan Faculty Practice. Blaum added that the doctors in her practice are uncertain about what exactly they did to generate savings.
Questions remain about how to motivate individual physicians because the experiment rewards organizations and not individual doctors who must actually ensure that a patient gets a flu shot or goes to the right specialist.
Download the Commonwealth Fund report at www.commonwealthfund.org/publications/publications_show.htm?doc_id=428880.
oordinating care and reducing hospitalizations can lower Medicare costs, according to early results of a Centers for Medicare & Medicaid Services (CMS) study.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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