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 health-care law requires Medicare to factor quality into payment for hospitals, nursing homes, physicians and most medical providers.
But the provision regarding doctors is considered the most complicated to enact, and it has encountered strong pushback.
Major physician groups have been pushing Congress to repeal the provision, while some health-policy experts fear that the amount of money Medicare plans to use for incentives will be too small to prod doctors to improve patient care.
Medicare has already decided that large doctor groups — those with 100 or more doctors, nurses, social workers or other health professionals — will gain or lose as much as 1 percent of their pay starting in 2015. Those incentives would double to 2 percent the following year under draft regulations Medicare released this month.
The proposal would phase midsize physician groups — those with 10 to 99 health professionals — into the program in 2016 instead of 2017. While they would be eligible for bonuses of up to 2 percent, they would be shielded from penalties that first year.
In 2017, the program would add the remaining doctors in practices of nine or fewer professionals — about 350,000 doctors, according to Medicare’s estimates.
The bonuses and penalties — formally known as the physician value-based modifier — would be calculated on quality measures that vary by specialty. Many of those measures check how often doctors follow basic medical approaches, such as screening older women with fractures for osteoporosis and documenting in medical records every drug a patient is taking. At least at the start, doctors will be able to select which of Medicare’s measures they want to be judged by.
The government also plans to take into account how much each doctor’s average patient costs Medicare as a way to encourage a more judicious use of testing and more aggressive efforts to avert hospitalizations. Medicare plans to compare doctors 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 change physicians’ behavior.
“To really make physicians wake up, you’re going to have to make it more than 1 or 2 percent,” said Michael Kitchell, former president of the Iowa Medical Society and a neurologist at the McFarland Clinic in Ames, Iowa, one of the state’s largest practices. “It isn’t that every physician is going to be happy. Some are going to resist these changes. But these quality measures are also evolving, so they will become measures that matter.”
Kavita Patel, the managing director for clinical transformation and delivery at Brookings Institution’s Engelberg Center for Health Care Reform, said the smaller the medical group, the more challenging it will be for the doctors to adjust to a new system where they must report quality measures to Medicare and may have their pay docked if they underperform.
“Most of these big practices have figured out how to integrate it into their work flow,” she said. “If you think of groups of 10 or more, the upside makes a lot of sense, but I’m still concerned about how these smaller practices will . . . share in downside risk.”
The American Medical Association has been urging Congress to eliminate the program when lawmakers complete the annual ritual of adjusting Medicare pay to doctors to avert massive automatic cuts. “To impose a program that takes money off the top of payments that have not kept up with inflation for more than 10 years will increase the migration of physicians into hospital settings, driving up overall Medicare spending in the process,” the AMA wrote in a letter to the House Ways and Means Committee in April.
The AMA declined to discuss Medicare’s new proposal.
— Kaiser Health News
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.