Second-year results of a Medicare physician group practice pay-for-performance demonstration project show it continues to save money and improve quality, but most of the participants have yet to reap any significant financial rewards for their efforts.
As a result, some of the participating groups are making it known they dont agree with the methodology the CMS uses to reward bonuses, and others are wondering about the long-term success of this value-based purchasing approach and how it will play out in the real world, especially in smaller practices. The groups are finding fault with a bonus methodology that requires both improvement in quality and lower costs relative to peers.
It isnt necessarily a question of fairness because the groups did agree to the demonstrations terms, said Mark Selna, associate chief innovation officer with Geisinger Health System, Danville, Pa. Do I like it? No. Do I think its the right balance to invest in quality work over the long term if the chances of getting a bonus are low? No.
Last week, the agency released the second-year performance results for the pilot project, called the Physician Group Practice demonstration, which is aimed at improving health outcomes and coordinating the overall healthcare needs of Medicare patients. Ten large practices representing 5,000 physicians and 224,000 Medicare fee-for-service beneficiaries are participating in the program, which began in 2005 and will conclude in March 2009.
According to the CMS, the 10 groups in the second year of the demonstration earned a total of $16.7 million in incentive payments for achieving benchmark or target performance on at least 25 out of 27 quality markers for patients with congestive heart failure, coronary artery disease and diabetes.
The total figure represents $13.8 million in performance payments for improving the quality and cost efficiency of care in performance year two, and an additional $2.9 million from the Physician Quality Reporting Initiative, a related CMS value-based purchasing program that offers a small incentive for reporting on quality measures, and factored into the group practice demos results.
The PQRI payments were divided among the 10 practices. However, the rest of the money went to only four of the groups: the Dartmouth-Hitchcock Clinic, Bedford, N.H.; the Everett (Wash.) Clinic; the Marshfield (Wis.) Clinic; and the University of Michigan Faculty Group Practice, Ann Arbor.
The other six didnt get incentive payments at all, despite their measured quality improvement.
From a quality standpoint, everyone met expected targets, said Douglas Carr, medical director of education and system initiatives at the Billings Clinic, one of the participating groups in the demo. The reason why Billings and five other groups didnt get a share of the $13.8 million bonus is because they all failed to meet a specific and complicated threshold on financial performance, he said.
The CMS under this demonstration project uses Medicare beneficiaries medical conditions to estimate and budget how much it will spend to provide care for each group practices assigned beneficiary patient population, Selna explained. If CMS actual cost ends up being less than 98% of that budgeted amount, the physician group practice qualifies for a bonus payment, he said.
Just four of the groups managed to meet that thresholdand in the CMS perspective, achieve significant savings for Medicare, Carr said.
According to the agencys calculations, the physician group demonstration saved Medicare $17.4 million in its second year. In Carrs view, the net savings is closer to $34 million. The problem is the agency isnt recognizing any savings under that threshold in calculating the total savings the physician groups achieved, he said.
Barbara Walters, senior medical director of the Dartmouth-Hitchcock Clinic, emphasized that the threshold was not a part of the original plan that we all signed up for. It was only after the fact that the White House Office of Management and Budget applied the threshold, so I think changing the rules of the game was perceived as not fairalthough we all remained on board, she said.
Patrick Smith, senior vice president of governmental affairs with the Medical Group Management Association, wonders how successful the program will be over the long term, especially in smaller practices if a financial incentive payment isnt guaranteed.
The bottom line is that it costs these practices money to participate in this demonstration, Smith said. They have to hire extra people and spend money on infrastructure and hardware and software to accommodate these patients, he noted.
The increased quality and clinical outcomes should have an impact on future cost savings as wellso a case could be made for some bonus just for quality alone, Walters said.
In the demonstrations first year, only two of the 10 practicesMarshfield and Michiganwere awarded any incentive payments, collecting more than $7 million for achieving the most significant savings to Medicare. <<