As Medicare faced its 40th birthday on July 30, the quality of care delivered to the program's beneficiaries moved to the forefront in Washington.
Sporadic events in the nation's capital commemorated the signing of the landmark legislation creating the program covering about 42 million Americans (July 18, p. 6). But as Medicare enters middle age, both the quality of care given to beneficiaries and questions about whether Medicare is paying too much for care are increasingly dominating discussion of the program.
Last week, the Commonwealth Fund released a survey that found that despite the overwhelming consensus that Medicare has improved access to healthcare for seniors, the program has not successfully used its leverage to improve the quality of care (See story below).
At the same time, Rep. Nancy Johnson (R-Conn.) introduced a bill seeking to reform the Medicare physician-payment formula. One part of the legislation would establish pay-for-performance bonuses to doctors. Also, the Senate Finance Committee held a hearing on the CMS' pay-for-performance initiative and how to get more bang for the Medicare buck.
All of this comes as Washington tries to rein in a Medicare program that spends more than $300 billion annually and is tied to a trust fund expected to go bankrupt in 2019. Serving as a backdrop is a scheduled 4.3% cut to physician Medicare reimbursements for 2006.
According to the Commonwealth Fund survey of 230 healthcare experts, 92% of respondents said Medicare has succeeded in providing stable, predictable coverage and guaranteed access to basic care for seniors, but only 21% said it has succeeded in using its purchasing power to improve quality.
Among lawmakers and the Bush administration, that sentiment is echoed. At last week's Senate hearing, Sen. Chuck Grassley (R-Iowa), chairman of the Finance Committee, said, "What we have is a systemic failure of Medicare payment systems to reward quality and to provide incentives to invest more in healthcare information technology. Until we pay providers more for providing better quality care, we are not going to see the improvements we need."
Much of the administration's efforts at improving quality is tied in with financial incentives. Currently, the CMS has pay-for-performance initiatives with hospitals, chronic-care providers and large medical groups. The CMS has said it is working on a proposal to include small physician practices.
As Congress goes about trying to ward off the 4.3% cut to Medicare physician reimbursements, awarding bonuses to doctors who deliver better care is one solution being proposed as well. Under Johnson's bill, meant to repeal the sustainable growth-rate formula used to determine Medicare physician reimbursements in 2007 and 2008, doctors would be required to report quality measures. Those who do would get reimbursement increases equal to the Medicare Economic Index, or MEI, while those who don't would receive payments at the MEI minus 1 percentage point. The index measures the average price change for costs involved with physician services.
In 2009, doctors who meet quality standards to be established would receive payment increases equal to the MEI. Those who don't meet the standards would receive reimbursements at the MEI minus 1 percentage point.
But even as pay-for-performance initiatives are being implemented, lawmakers and agency administrators say significant kinks remain. During the hearing, Herb Kuhn, director of the Center for Medicare Management at the CMS, said any bonus program must not become so burdensome that doctors will not participate.
He said also that such systems must be designed so that doctors are not discouraged from taking on the sickest and most difficult patients, a concern repeated by Johnson at a news conference announcing her bill.
Nancy Nielsen, an American Medical Association trustee, said at the hearing that pay-for-performance measures must also meet evidence-based standards in order to benefit patients and providers. "For patients to benefit from public reporting, they must receive accurate and relevant information," she said in her testimony. "Data collection must recognize that some factors are out of a physician's control."
Along with bonus programs, there is strong support for the adoption of healthcare information technology by providers to improve quality. According to the Commonwealth Fund survey, a vast majority of respondents, 89%, said Medicare should use its leverage to speed up adoption of electronic health records and health information technology.
Recently, major IT legislation was introduced by Sens. Bill Frist (R-Tenn.), Hillary Rodham Clinton (D-N.Y.), Mike Enzi (R-Wyo.) and Edward Kennedy (D-Mass.) and immediately passed through committee. HHS Secretary Mike Leavitt is forming the American Health Information Community, with members from the private and public sectors, to develop standards of interoperability and protect the security and privacy of electronic health records.
And on Aug. 1, Medicare is set to take a major step in deflecting some of the costs of adopting technology when it will offer doctors free software to computerize their medical records (See story, p. 13).
Still, resistance remains high among many doctors, especially those in small practices, to invest in technology, said Charles Safran, chairman of the board of the American Medical Informatics Association. Only about 20% of all doctors' practices have implemented electronic medical records, he said, and among small practices, only 5% have adopted such systems.