Medicare pay-for-performance bonuses disappoint

November 1, 2008

Although pay-for-performance saves the agency money and improves quality of care, financial rewards for most participating physicians are small.

Second-year results of a group practice pay-for-performance demonstration project being conducted by Medicare show that although the project saves the agency money and improves quality of care, financial rewards for most participating physicians are small. Participants in the Physician Group Practice project comprise 10 large practices in 10 states representing 5,000 physicians and 224,000 Medicare fee-for-service beneficiaries. The Centers for Medicare and Medicaid Services (CMS) awards bonuses to these participating groups based on performance measures of quality in managing congestive heart failure, coronary artery disease, and diabetes.

Modern Healthcare (8/14/2008) reported that the project's physician groups saved Medicare $17.4 million in its second year and that the 10 groups earned a total of $16.7 million in incentive payments. This figure represents $13.8 million in performance payments for improving quality and cost efficiency of care and an additional $2.9 million from the Physician Quality Reporting Initiative (PQRI), a related CMS program that provides a small incentive for reporting on quality and clinical measures. The PQRI payments were divided among the 10 practices, but only four groups received the rest-the major portion-of the money. Although the other six groups also achieved expected performance targets for at least 25 of 27 quality markers as required, they were disqualified for performance payments because they did not reach a specific and complicated threshold for financial performance.

CMS also announced a pilot program in Arizona and Utah to determine if personal health records (PHR) improve health outcomes and lower costs. Under the program, which will be conducted over the course of 2009, up to 2 years of Medicare beneficiary data will be transferred into individual records.