January 13, 2005

A Medicare pay incentive program gets a boost from MedPac

Washington—On Jan. 12, MedPac Commissioners voted to recommend that Congress establish a quality incentive payment policy for physicians in Medicare. The new payment policy would call for 1 percent to 2 percent of all Medicare physician payments to be set aside to make higher payments to physicians with better performance or who participate in quality programs. While proposed as budget neutral, this payment policy could have a not-so-neutral impact on physicians, especially those who can’t or choose not to meet these benchmarks.

In response, the American Academy of Ophthalmology will fight to ensure that ophthalmologists can compete for the incentives under a “pay for performance” (P4P) plan. On Jan. 18, the Academy will meet with key leadership from ophthalmic specialty societies to present its strategy.

CMS is testing the concept in several P4P demonstration programs in the next year. The quality measures used in the demonstrations mostly relate to primary care physicians and are budget neutral. The P4P measures being used by CMS include provider adoption of health information technology (HIT) measures. 

Ophthalmology Pledges to Stay Involved in the Process

“For ophthalmologists to become involved,” states William Rich, MD, former Academy Secretary for Federal Affairs and chairman of the RVS Update Committee (RUC), “the Academy will need to submit evidence-based performance measures and concurrently develop Category II codes that can identify when the service has been performed.”

Historically, the Academy has been a leader in quality of care issues, said Dr. Rich. The Academy began looking at performance measures in the early 1980s, which resulted in the publication of the Preferred Practice Patterns. In the late 1990s, the Academy developed a software program for cataracts surgical outcomes. 

“But there was no reward for docs who looked at outcomes or assiduously followed our PPPs,” he explained. “Many thought the Academy was way ahead of the curve. Well, the rest of medicine and the payers have caught up, and the loudest buzz in Washington is manipulation of physician payment schedules to reward quality.”

Background on P4P

Pay for performance is not a new concept, and physicians have dealt with similar private sector programs. The private insurance industry has P4P programs that are limited to primary care physicians and chronic diseases. Like the proposed Medicare plan, they are usually budget neutral, meaning that any money awarded to the primary care physician comes from a pool of total physician reimbursement. 

“It is commonly held that a 5 percent payment differential is needed to encourage docs to participate in P4P programs in order to offset the higher staff and administrative costs of participation,” Dr. Rich said.

Of course, there will be a great deal of discussion on how the benchmarks of Medicare’s P4P will be determined. Working with specialty societies, the American Medical Association’s (AMA) Physician Consortium for Performance Improvement will develop physician performance measurement sets. These data sets will be forwarded to the National Quality Forum, which includes medical groups, patient advocacy organizations, industry representatives and others. Approved data sets will then be forwarded to CMS for their consideration.

How can a payer identify when a physician has appropriately followed an approved measure?  The AMA Current Procedural Terminology (CPT) process includes Category II Codes that are tracking codes for performance measures. For example, 400F can be added to a Form 1500 billing form when a myocardial infarction patient has been prescribed a beta-blocker. These codes are approved yearly in January and July. 

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The American Academy of Ophthalmology is the voice for ophthalmologists and their patients in Washington, D.C., and is the world's largest organization of eye physicians and surgeons, with more than 27,000 members.

Reporter Contact: Media Relations, 415-561-8534, or media@aao.org