As private sectors of the healthcare industry begin linking healthcare quality to reimbursement, the federal government has stepped up its own effort to get in the game.
The Centers for Medicare and Medicaid Services announced last week that it will conduct a three-year demonstration project through which physician group practices can earn bonuses for controlling cost through quality improvement and better management of patients.
The move follows the CMS' announcement, first disclosed by Modern Healthcare last month, that it is in talks with hospital alliance Premier to link hospital reimbursements to quality of care (Sept. 16, p. 9). The CMS' latest plan to test the system also follows the Pay for Quality initiative spearheaded by the National Committee for Quality Assurance (Sept. 23, p. 8).
"Private companies have seen that care can improve more after they create incentives, and we want to test that concept in Medicare," CMS Administrator Thomas Scully said in a written statement. To qualify for the project, physician groups must employ at least 200 doctors. The application deadline is Dec. 26.
"We applaud the CMS for moving in this direction," said Andrew Webber, the NCQA's vice president of external relations. "Leadership in the physician community understands this is coming."
Under the project, participating physician groups will receive 80% of the savings they generate through quality improvement. The remaining 20% of savings would go back to the CMS' coffers, an agency spokesman said.
The group practice community is concerned that as practices accrue savings, the CMS will adjust performance targets accordingly, which could limit the size of future bonuses.
"With costs going up and payments not increasing, I would look at this and say, `OK, they're going to give me a bonus, but what am I going to give them?' " said Patrick Smith, spokesman for the Medical Group Management Association.
As it moves forward with its own initiative, the NCQA, a private, not-for-profit group, is working informally with the CMS to coordinate the development of performance and quality indicators.
In its applicant solicitation, the CMS said it would collaborate with physician groups to develop quality measures acceptable to both parties. For the NCQA, that's an important component of the project's success.
"It creates a real sense of ownership," Webber said. "You get the initial buy-in from physicians, who have to be part of this process."