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Medicare Steps Up Efforts to Link Docs’ Pay to Quality of Care

Affordable Care Act mandates bonuses and penalties on group physicians (July 22)

Medicare is accelerating plans to peg a portion of physicians’ pay to the quality of their care.

The changes would affect nearly 500,000 doctors working in groups. The Patient Protection and Affordable Care Act (PPACA) requires large physician groups to start getting bonuses or penalties based on their performance by 2015, with all doctors who take Medicare patients phased into the program by 2017.

The program is a major component of Medicare’s effort to shift medicine away from its current payment system, in which doctors are most often paid for each service regardless of their performance. The current system, researchers say, financially encourages doctors to do more procedures and is one of the reasons health costs have escalated. The PPACA requires Medicare to gradually factor quality into payments for hospitals, nursing homes, physicians, and most medical providers.

Medicare hasn’t announced exactly how it will dole out bonuses and penalties, however. There have to be financial losers in the program, because the health law requires that the program not increase the budget deficit.

Bonuses and penalties — formally known as the “physician value-based modifier” — would be calculated on quality measures that vary from specialty to specialty. Many of those measures check to see how often doctors follow basic medical approaches, such as screening older women with fractures for osteoporosis. At least at the start, physicians will be able to select which of Medicare’s measures they want to be judged by.

In determining bonuses and penalties, the government also plans to take into account how much each doctor’s average patient costs Medicare, in order to encourage a more judicious use of testing and more aggressive efforts to avert hospitalizations. Medicare plans to compare physicians against others in their specialties. Physician groups whose patients are the least costly to Medicare — after taking into account their overall health — are eligible for bigger bonuses and softer penalties.

Medicare said the latest changes were a response to concerns that the penalties were not severe enough to actually change physicians’ behavior.

Source: Kaiser Family Foundation; July 22, 2013.

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