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, the formula with which CMS determines physician reimbursement, say political observers.

As currently configured, the SGR is predicted to reduce physician reimbursement by 5.2 percent in 2006. The AAFP and its counterparts in the medical community have called on Congress to scrap the SGR in favor of a formula that more closely reflects actual medical costs. Congressional willingness to do so comes with the caveat that Medicare should begin to hold physicians accountable for the care they provide.

That accountability will likely come in the form of pay-for-performance, the umbrella term for physician payment methodologies that provide incentive reimbursement to physicians who meet performance criteria in clinical care and can document that care through office management systems that track services provided, patient education and outcomes.

"Physicians have the SGR hanging over their heads, and we want it fixed," says Michele Johnson, government relations representative in the AAFP Government Relations Division. "Congress wants value-based purchasing, most likely in the form of pay-for-performance. So these issues are intertwined because we have a need and Congress has a desire."

True. Key federal lawmakers are considering attaching pay-for-performance to legislation that addresses the SGR. Among those at the forefront: Rep. Nancy Johnson, R-Conn., chair of the House Ways and Means Health Subcommittee, who has suggested that P4P would be a part of any Medicare reimbursement update. Likewise, Sen. Charles Grassley, R-Iowa, Senate Finance Committee chair, announced plans to propose a fee change that likely would include P4P elements.

Many P4P tenets reflect the Future of Family Medicine's new model of care. Like the new model, P4P relies on efficient data collection and dissemination, evidence-based medicine, and patient-centered care.

With pay-for-performance, "physicians who install systems for better care may be rewarded," said AAFP President Mary Frank, M.D., of Mill Valley, Calif. "The AAFP supports pay-for-performance programs that engage the patient and provide positive incentives for physicians."

Given the concept's potential for encouraging implementation of the new model of care, AAFP policy supports pay-for-performance if it meets specific criteria. Among them:

To that end, AAFP has joined several groups that are developing performance measures on which P4P could be based. Among those groups is the AMA Physician Consortium for Performance Improvement, which has proposed a "starter set" of measures on nine conditions. Those measures are among those that have been submitted to the National Quality Forum, which makes final determinations and recommendations on performance measures for CMS.

Changing the SGR and implementing P4P remain tricky on several levels. At its financial core, revising or ending the SGR could increase an already worrisome federal deficit. By changing the formula, Congress would wipe out currently projected Medicare savings by eliminating a projected 5.2 percent decrease in physician reimbursement.

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."

That recommendation won't fly with physicians, who see it as a reimbursement reduction, not an incentive, says Kevin Burke, director of the AAFP Division of Government Relations. It means physicians must accept a withhold from their reimbursement and invest in technology or additional personnel without assurances their investments would reap Medicare incentive payments, he said.

Forty-five other medical organizations agree it would be counterproductive to reduce some physicians' reimbursements using a budget-neutrality measure, the organizations and AAFP said last year in a letter to MedPAC Chairman Glenn Hackbarth, J.D. Inadequate reimbursement has forced physicians to delay investments in facilities, staff and equipment. "In order to flourish, comprehensive efforts to improve the quality of patient care should be accompanied by reliable, positive updates in physicians' Medicare reimbursement rates. We further believe it would be counterproductive to reduce some physicians' reimbursement through a budget-neutrality provision."