Feds Unveil Medicare Pay-For-Performance ProjectFeds Unveil Medicare Pay-For-Performance Project

Rewarding health-care providers based on the quality of the care they give is one important way to help drive the industrywide adoption of health-care IT, such as electronic prescribing and digital health-record systems, which can reduce medical errors and costs.

At the same time, IT is a vital tool in collecting the data needed to measure quality of care.

Those were common themes among the many ideas discussed at the World Health Care Congress in Washington, D.C., on Monday. Conference attendees, who convened to identify and discuss new strategies to improve health care, included approximately 1,400 senior managers and executives from health-care companies such as insurers, hospitals, health plans, and physician groups, as well as government leaders and representatives from large employers who provide health-care benefits to workers.

Right now, the health-care industry operates primarily under a pay-for-service structure, in which hospitals, doctors, and others are paid according to the health services they provide to patients, rather than the quality of that care.

Meanwhile, IT tools such as databases that collect information about patient outcomes can help provide patients with better information to assist them in making their own care choices, like choosing one specialist over another based on quality info. Those same IT tools could help payers such as insurance companies and especially the federal government in programs like Medicare restructure payment to providers based on quality of the care they give.

Some of those pay-for-performance initiatives are beginning to emerge. On Monday at the conference, Dr. Mark McClellan, administrator of the U.S. Health and Human Service Department's Centers for Medicare and Medicaid Services (CMS), unveiled Medicare's first "pay-for-performance" demonstration project, which will involve 10 of the country's largest physician groups, representing 5,000 physicians and more than 200,000 Medicare fee-for-service beneficiaries.

The physician groups participating in the demonstration are Dartmouth-Hitchcock Clinic, Bedford, N.H.; Deaconess Billings Clinic, Billings, Mont.; The Everett Clinic, Everett, Washington; Geisinger Health System, Danville, Pa.; Middlesex Health System, Middletown, Conn.; Marshfield Clinic, Marshfield, Wis.; Forsyth Medical Group, Winston-Salem, N.C.; Park Nicollet Health Services, St. Louis Park, Minn.; St. John's Health System, Springfield, Mo.; and the University of Michigan Faculty Group Practice, Ann Arbor, Mich.

Many of those groups, including Geisinger Health Systems, have made big strides in recent years by deploying clinical IT, such as Geisinger's Web-based patient health-records system, MyGesinger.

"We're taking some concrete steps for pay-for-performance programs," McClellan told conference attendees. The program has many opportunities for cost savings and getting more "out of those services," he said. The program can likely work on a larger scale, he said, and hinted that in President Bush' fiscal 2006 budget, expected to be unveiled on Feb. 7, funding for other pay-for-performance projects will be included.

"We want to reward better care and innovators in delivering care," including physicians who use electronic health records, as well as offer programs such as case management for patients with chronic conditions, he says.

Under the demonstration, physician groups will enhance existing programs and develop new strategies for improving care for the Medicare fee-for-service patient, especially chronically ill and high-cost beneficiaries, CMS says. These strategies include disease-management and case-management programs, as well as increased use of IT to facilitate care coordination.

Pay-for-performance programs are among the many initiatives the government is evaluating for improving quality of care and reducing health costs, McClellan says. "Solving the whole health-care cost problem is very complex," he says. "We need to manage costs while encouraging innovation." Health-care costs have climbed in the double digits annually over the last several years; however, Medicare, the government health-care program for seniors, is growing about 9% annually and makes up 4% of the nation's gross national product, economists at the conference said. Meanwhile, Medicaid, a health-care program for lower-income citizens paid for by federal and state governments, makes up 2% of the GDP, the economists say. In coming years, as the nation's baby boomers age and people live longer, those two programs combined could jump to 20% of the GDP, economists say.

Douglas Holtz-Eakin, director of the Congressional Budget Office and a speaker at the World Health Care Congress, says, "Rising health-care costs is a central issue [for the nation] at this time."