Pay for performance pilots get under way

March 1, 2005

Physician groups will continue to be paid on a fee-for-service basis.

NATIONAL REPORTS -In a major initiative to move toward a pay-for-performance strategy to improve quality of care and to create efficiency for the Medicare program, the Centers for Medicare and Medicaid Services (CMS) announced a pilot program in which it will pay providers for the quality of care they provide to seniors and people with disabilities.

The three-year Physician Group Practice demonstration program is Medicare's first pay-for-performance initiative for physicians. CMS will assess both quality performance and quality improvement under the demonstration. The quality measures that will be used focus on common chronic illnesses in the Medicare population including congestive heart failure (CHF), coronary artery disease, diabetes mellitus, hypertension, as well as preventive services, such as influenza and pneumococcal pneumonia vaccines, and breast cancer and colorectal cancer screenings.

Under the demonstration, physician groups will continue to be paid on a fee-for-service basis. Ten physician groups across the nation are participating, including Park Nicollet Health Services in St. Louis Park, Minn., St. John's Health System in Springfield, Mo., and Marshfield Clinic in Marshfield, Wisc.

"[The demonstration program] is a unique mechanism that creates incentives around quality improvement," says Sam Carlson, MD, executive vice president and chief medical officer, Park Nicollet Health Services. "When this demonstration was announced, we recognized the synergy between the objectives of this demonstration and the objectives of Park Nicollet. This demonstration offers an opportunity to prove that cost-effectiveness is a result of quality improvement."

This demonstration, along with other Medicare projects, reflects the industries increasing attention to the impact of chronic disease on healthcare costs, according to Janet Pursley, vice president, medical management services, St. John's Health System.

"The current reimbursement methodology by Medicare does nothing to incentivize coordination of care or the tracking of quality outcomes," Pursley says. "In our organization we have been able to demonstrate savings by reducing fragmentation through targeted care management resources."

PHYSICIAN GROUPS AT WORK More than three years ago, Park Nicollet began a successful set of projects to establish an electronic medical record that spans its clinics, hospital and home care services. "This electronic tool helps the organization automate and streamline our processes, support clinical decision making, significantly reduce medical errors, and to personalize the care we provide to our patients," Dr. Carlson says. "If this proves successful, we will improve the quality of preventive services for our patients and thereby reduce the need for inpatient admissions."

For CMS, Park Nicollet will design and pilot a comprehensive model supporting patients with chronic diseases, according to Dr. Carlson. "The model looks at the necessary components of self-management support, delivery system changes, decision support and clinical information systems necessary for productive interactions between informed activated patients and a prepared practice team," he says. "Park Nicollet has most of the necessary components to assemble this model. Our objective is to catalyze the integration of these components into a comprehensive model of support designed to understand patient preferences and improve care for individuals with chronic diseases. Our focus will be initially on diabetes, CHF and coronary artery disease. While our focus will be on all patients with these chronic diseases, we have an opportunity under this demo to focus on improving care with special attention to our Medicare patients.

"Combining the use of Park Nicollet's innovative electronic medical record and using 'lean management techniques', we will be able to coordinate services for our chronic patients to improve their care experience and their health. If successful, we will be able to prevent the need for inpatient admissions and create savings," Dr. Carlson adds.