Friday, May 13, 2005

Another reason to non-par Medicare?

Congress Likely to Link Physician Reimbursement to Pay-for-Performance
PfP. P4P. Pay-for-performance. Call it what you may, the newest buzz term for physician reimbursement is probably going to affect Medicare payment in the future. Most likely, P4P will be wrapped into legislation that addresses the sustainable growth rate [SGR], the formula with which CMS determines physician reimbursement, say political observers.
Congress/CMS will only implement what they think will save money. I don't believe that quality of care has anything to do with the motivation.
Some lawmakers may see P4P as a cost-cutting solution. That potential grew when the Medicare Payment Advisory Commission recommended withholding money from all Medicare payments to distribute to physicians who meet performance measures.

"To minimize major disruptions, the program should be funded initially by setting aside a small portion of budgeted payments -- 1 percent or 2 percent," the commission recommended in its March report to Congress. "The program should be budget-neutral."
Here in Tennessee, we had a disastrous experience with withholds. The TennCare Managed Care Organizations (MCO's, companies with whom the state contracted to administer TennCare) negotiated to pay a certain capitated amount, say $10 per patient per month. Of this, a certain percentage, say 15%, was withheld in order to create a fund from which to pay specialists that weren't capitated, costs of ER visits, and other unexpected costs. At the end of the year, each participating provider would be awarded a part of the money that remained in the "withhold fund." Providers who overutilized by sending too many patients to specialists or the ER, would get less or maybe none of the withhold fund.

The problem was that, year after year, there was never any money left in the "withhold fund." This meant that no one got any of this money. So where was the incentive to avoid overutilizing? Why work your tail off when you could just send everyone to a specialist or the ER? Clinics were enrolling far more patients than they were capable of taking care of because there was no penalty if you just sent them all to the ER when your appointments were booked.

I suspect that the withhold fund this article describes will also be used to pay other expenses, resulting in no money left over to pay "the good docs." There is a lot of talk about the expenses clinics will have trying to implement the programs necessary to comply with the requirements and that the program should reimburse these expenses. Do you think, maybe, that the withhold fund will be the source of these moneys?

A recommendation by the AAFP:
P4P programs "should utilize new money funded by using a portion of the projected health plan savings. There should be no reduction in existing fees paid to physicians as a result of implementing a P4P program."
This ain't going to happen. Trust me, anything that happens will be designed to reduce expenses. This program will not pass if it means that it will cost more. This program will be used to reduce payments to lower performing physicians, not increase payments to higher performing physicians.

Other excellent posts on this subject: Medrants and Medpundit