Medicare experiments with quality incentive programs

Demo would test paying physicians bonuses to improve quality of care.

By Markian Hawryluk, AMNews staff. Nov. 4, 2002.

Washington -- What would it cost to encourage you to improve the quality of care in your practice? How about $20 a patient?

In 1999, Anthem Blue Cross and Blue Shield implemented a quality improvement program in New Hampshire that offered primary care physician group practices $20 per enrollee if they could finish in the top 25% of network practices on a set of quality measures.

In the first year, the plan's average rates for mammography, immunization and pediatric exams showed increases. In 1999, about 80% of women in the network received Pap smears. By 2000, the top quartile of physician practices were testing 98.5% of adult female patients.

While this pay-for-performance approach is less than universal in the private sector, it is virtually nonexistent in Medicare. But in September, the Centers for Medicare & Medicaid Services said it wanted to change that by paying physicians bonus payments for improving quality of care.

"Doctors who treat Medicare beneficiaries already provide them with high-quality care," CMS Administrator Tom Scully said. "Private companies have seen that care improve even more after they create incentives, and we want to test that concept in Medicare."

Under a three-year demonstration project, physician groups will be paid on a fee-for-service basis but can share in the savings resulting from better quality of care. Groups also can earn a bonus for meeting certain quality benchmarks, such as the percentage of patients given flu shots.

If practices can generate more than 2% savings over average Medicare Part A and B treatment costs, they can keep a portion of those funds. [...]