Healthcare Business News

Lag in docs' incentive pay may hurt quality aims, GAO says

By Joe Carlson
Posted: December 26, 2012 - 5:15 pm ET

The CMS wants to financially reward doctors who provide high-value care, but the one-year time lag between improvements in efficiency and payment adjustments might hurt Medicare's hopes for major changes, a report to Congress says.

In a 43-page report released Wednesday (PDF), the Government Accountability Office pointed out the time-lag issue as one of several areas where the CMS could learn from private insurers about the best ways to give physicians incentives to deliver efficient, high-quality healthcare. The report was mandated by Congress as part of the Middle Class Tax Relief and Job Creation Act of 2012.

In its study, the GAO examined the pay-for-performance programs of 12 private insurance companies and found that similar initiatives spearheaded by the CMS as part of the Patient Protection and Affordable Care Act could benefit from the experiences and lessons learned in the private sector.

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In the time-lag example, insurers generally told the CMS that rewarding physicians for providing better care works better when the enhanced payments fall closer to when the care was provided. The private insurers tended to increase payments within seven months of physicians' having met the goals, instead of the CMS' proposed one-year lag.

GAO also found that private insurers tended to reward physicians through compensation changes at the group level, rather than varying payments to individual physicians. Physicians tend to favor the approach of changing payments to groups, but the CMS has yet to release its proposed method for how it will compute changes for doctors in small or solo practices.

And although the CMS intends to make financial changes based on performance against absolute industry benchmarks on various quality indicators, the GAO said that private insurers' experience finds that many providers would do better if some part of the payments were based on providers' own improvement over past years.

The ACA, signed into law in March 2010, mandated the creation of the value-based payment modifier program for some physicians in 2015, and for all doctors by 2017. The program will adjust physicians' Medicare payments higher or lower based on how they perform in the Physician Quality Reporting System, which tracks cost and quality of care. The system is already slated to reduce lower-performing doctors' payments by up to 1.5% in 2015.

However, the legislative battle over how the final rules implementing the pay-for-performance programs in 2015 and beyond remains ongoing, with interest groups like the American College of Physicians among the many advocating for changes favored by their constituencies.

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